Article 29 Overview

Non-Deductible Expenses (Article 29)

Categories of Non-Deductible Expenses

1. Personal expenses — expenses not wholly for business
2. Entertainment and recreation — 50% non-deductible
3. Fines and penalties — administrative and criminal penalties
4. Bribes and illegal payments — non-deductible
5. Dividends — distributed profits
6. Income tax — corporate tax itself
7. Donations — unless to qualifying public benefit entities
8. Input VAT — that is non-recoverable

Key Principle

These expenses are added back to accounting profit to arrive at taxable income.

Documentation

Even though non-deductible, these expenses must still be recorded in the accounts. The adjustment is made in the tax computation, not the financial statements.