Tax should be paid on repossessed assets.
The core issue of the recognition of repossessed assets lies in the implementation and grasp of the principle of "substance over form", that is, whether to confirm the entry into the account or terminate the recognition, the key should be to see whether the risks and rewards of ownership of the repossessed assets are transferred.
If almost all (generally more than 95%) of the risks and rewards of the ownership of the repossessed assets have been transferred, the repossessed assets shall be recognized or derecognised; if almost all the risks and rewards of the ownership of the repossessed assets are retained , the confirmation should not be confirmed or terminated.
According to the above principles, when an act of expropriating a debt with property occurs, the principal and interest of the debtor's creditor's rights should first stop accruing interest on the date when the agreement or court judgment takes effect. After the debtor obtains ownership and actually receives and takes possession of the foreclosed assets, , re-recognize the repossessed assets, offset the principal and interest of the debt, and recognize the profit and loss of the debt, otherwise it will not be recognized.
Extended information
Under the fair value valuation model, there are different opinions and practices in actual work on whether taxes and fees collected during the collection process should be included in the value of the foreclosed assets. One view is that taxes and fees in the collection process are direct expenses and constitute the cost of repossessed assets. Direct expenses should be recorded in the book value of repossessed assets in accordance with the initial recognition method of general assets.
Another point of view is that if the repossessed assets are valued at fair value, and if taxes and fees are recorded into their book value in addition to the existing market value or appraised value, then their value is no longer fair and is inconsistent with fair value. Contradictory.
Under the fair value valuation model, taxes and fees in the collection process should not be recorded in the recorded value of the repossessed assets.
First, repossessed assets are assets that the creditor passively makes concessions and receives when the debtor encounters financial difficulties. It is not an asset that the creditor holds subjectively. Repossessed assets are generally disposed of in the short term, and their costs and expenses are not amortized during the period to be disposed of, so the relevant taxes and fees are recorded in the value of the repossessed assets and capitalized, which has no practical significance;
Second, in the relevant standards of the Ministry of Finance In the accounting accounts and main accounting treatments, it is also proposed that repossessed assets should be recorded at fair value, and the difference between the book value of relevant taxes and claims and the fair value of the repossessed assets should be recorded in the current profit and loss.
So under the fair value valuation model, taxes and fees in the collection process should not be recorded in the book value of the foreclosed assets, but should be directly recognized as current profits and losses.
Baidu Encyclopedia-Foreclosed Assets