i) Risks not covered by either the guarantee of state or adequate collateral security: Deduction of the total doubtful debt are spread over a period of three years as follows:
- Year 1 - up to 25%
- Year 2 - up to 50%
- Year 3 - up to 25%
ii) For other risks covered by adequate collateral security, deduction of total doubtful debt are spread over a period of four years as follows :-
- Year 1 - up to 15%
- Year 2 - up to 30%
- Year 3 - up to 30%
- Year 4 - up to 25%
It is important to note that provisions for doubtful debts are matters that are in principle, left to the Judgment of management, although the reasonableness or otherwise of management's judgment can be questioned by the Tax Authorities since the provision should not be over stated. The decision by the tax Authorities to bring this issue into the Legislative domain will probably simplify matters for all concerned.
NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought for specifics.
For further information contact Mr Nico Halle, Tel: +237 42 64 79 or Fax: +237 43 26 34 or enter text search 'Nico Halle Law Firm' and 'Mondaq Business Briefing'.