Regulations on the Recognition of Interest Expenses Related to the Purchase and Construction of Fixed Assets by Profit-seeking Enterprises
The National Taxation Bureau of the Central Area, Ministry of Finance expressed that referring to International Accounting Standard No. 23 "Borrowing Costs" and Enterprise Accounting Standard No. 11 "Borrowing Costs," Article 97 of the Regulations Governing Assessment of Profit-seeking Enterprise Income Tax has been revised regarding the regulations on the recognition of interest expenses related to the purchase and construction of fixed assets.
The Bureau further summarized the key points of the above-mentioned revised regulations as follows:
1. Interest expenses on borrowing for the purchase of fixed assets other than houses and land, and the interest expenses payable from the payment to the acquisition of the assets, shall be included in the cost of the assets.
2. Interest expenses on borrowing for the construction of fixed assets and buildings for business use, and the interest expenses payable during the construction period, shall be regarded as the cost of the assets; after the construction is completed, the interest expenses payable may be recorded as an expense. However, for houses that are inventories and not for business use, the interest expenses shall be recorded as deferred expenses, and then be recorded as an expense when the house is sold.
3. Interest expenses on borrowing for the purchase of houses and land for business use shall be recorded as capital expenditures; the interest expenses on borrowing after the completion of transfer procedures or delivery for use may be recorded as an expense. However, for buildings and land that are inventories and not for business use, the interest expenses shall be recorded as deferred expenses and then be recorded as an expense when sold.
4. Interest expenses on borrowing for the purchase of goods other than houses and land shall be recorded as financial expenses and shall not be included in the calculation of purchase costs.
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(Contact: Ms. Lin, Profit-seeking Enterprise Income Tax Division; Tel:04-23051111 ext. 7156; E-mail: NB08184@ntbca.gov.tw）
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=e79bf600a9fb4c25bbf4ae1f3a2dfd02