Tax Concessions for Loan Impairment Provisions Extended
Banks are currently allowed to claim tax deductions for loan impairment provisions made under MAS Notice 612 on Credit Files, Grading and Provisioning, subject to caps as stipulated under Section 14I of the Income Tax Act. This concession was introduced in 2005 and is valid for five Years of Assessment. Similar tax concessions were granted for collective loan impairment provisions made by finance companies and merchant banks.
In order to encourage banks to continue making adequate loan impairment provisions and bolster their financial strength to underpin continued lending in the downturn, MAS worked with the Ministry of Finance to extend this tax concession, with the same terms and conditions, for a further three years. The extension of the tax concession will likewise apply to finance companies and merchant banks.