Treasury Management FAQ's

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There are different cases in order to deduct interest payment. What happens with interest paid during the establishment of foreign enterprise period?

During the start-up period, interest on borrowing for establishment or construction should be treated as capital expenses and can be included in the original price of relevant assets, which may be depreciated or amortised in future years. The interests actually paid annually after the commencement of the business operation will be deducted as current expenses in the relevant taxable years.

During the production or business operation period, interests on loans to purchase equipment and expand operation should be treated as capital expenses if the borrowings are invested before actual use by taxpayers. Should there be any interest accrued after the actual use of the relevant assets or properties, the amount actually paid may be deducted from the taxable income of taxpayers. Any interests on borrowings for working capital are deductible as other expenses.