The National Taxation Bureau of Northern Area indicated that according to the Regulation Governing Assessment of Profit-Seeking Enterprise Income Tax, Article 94, if a profit-seeking enterprise is unable to collect full or partial accounts receivable due to the debtor before it dissolved, concealed itself, moved, or was unfound, the enterprise should acquire the post office’s legally-attested letter stating the mail delivery failure of the demand letter. In addition, the enterprise should make sure the demand letter is addressed to the debtor’s actual business address before it dissolved, concealed itself, moved, or was unfound. After acquiring the said legally-attested letter sent by the post office, the bad debt is regarded as realized; the enterprise can write off the allowance for bad debt in the realized year.
The Bureau indicated that when a profit-seeking enterprise collects accounts receivable by using the legally-attested demand letter, the mailing address should be the debtor’s actual business address before the debtor dissolves, conceals itself, moves, or is unfound. The actual business address is the operating location registered by the debtor with the authorities according to the law on the day of sending the legally-attested demand letter. The profit-seeking enterprise should use the said document to record the bad debt loss.
The Bureau further explained that, as it is common that a profit-seeking enterprise changes its business address frequently, the enterprise can use the website of the Ministry of Economic Affairs or the Ministry of Finance to inquire as to the actual business address when demanding accounts receivable.