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6.4. Reserves and Provisions

Provisions are not allowed as deductible expenses when created. However, they are allowed as deductions when they are written off or utilized. Exceptions to this rule include the following:

  • Provisions for loan losses are deductible for tax purposes for banks and other financial companies regulated by the central bank.
  • Provisions for unexpired risks, unsettled claims and contributions to contingency funds are deductible for tax purposes for insurance companies.