On 7 October 2026, the STS outlined the procedural requirements for writing off fixed assets destroyed due to military actions, natural disasters, or accidents without triggering deemed supply VAT under Article 138 of the Tax Code. The guidance is critical for enterprises in frontline regions and those affected by infrastructure attacks, ensuring that VAT is not imposed on assets that have ceased to exist and generate no economic benefit.
Key Takeaways
- Official Write-Off Act: A commission act (Form OS-4 or OS-4a) signed by an authorized commission is mandatory; it must reference the cause of destruction (e.g., shelling, fire) and confirm zero residual value.
- Input VAT Reversal Not Required: If input VAT was fully deducted upon acquisition, no reversal is needed upon destruction write-off, provided the asset was used for taxable supplies and the destruction is properly documented.
- Insurance Compensation: Any insurance payout received for the destroyed asset is treated as taxable income for corporate profit tax but does not constitute a VATable supply.
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