As of 2 October 2026, the National Revenue Information Director (KIS) issued guidance on whether taxpayers must create inventory write-downs at quarter-end when goods remain unsold but are known to be unmarketable at book value. The interpretation hinges on the recoverable amount from sale less costs to sell, per Article 28(1)(9) of the CIT Act. Taxpayers using quarterly reporting must assess net realizable value at each reporting date, not wait until year-end.
Key Takeaways
- Mandatory Quarterly Assessment: Entities preparing interim financial statements must evaluate inventory impairment at each quarter-end, recognizing write-downs when carrying amount exceeds recoverable value.
- Recoverable Amount Criteria: The write-down is based on estimated selling price minus completion and disposal costs; mere intention to hold stock does not justify maintaining inflated valuation.
- Tax Deductibility Timing: Write-downs recognized in quarterly CIT returns are deductible in that period, reducing taxable income earlier and aligning tax accounting with economic reality.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement