In general, provisions or reserves, such as asset impairment reserves, bad debt provisions, and risk reserves are not deductible in China. Only in cases where losses have been incurred or payment made can they be made deductible, although this requires substantial proof be provided to the tax authorities. See Sec. 6.5. for details.
Financial institutions and insurance companies may deduct certain provisions and reserves subject to the specific caps specified in the relevant tax circulars.