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6.4. Reserves and Provisions

Generally, provisions are not allowed as deductible expenses for tax purposes. However, provision made for bad debts is allowed as deductible expense up to a maximum of 2% of the year-end debtor’s balance (10% in case of financial leasing companies effective from 1 January 2019).

Further, bad debts can be written off as uncollectible provided the company can prove that all possible steps have been taken to recover the same. Provisions for loss in stock value are deductible up to a maximum of 3% of losing stock value.