1. Basis for Tax Deductions and Recognition of Legitimate Expenses
During operations, businesses often encounter situations where they authorize individuals (employees, purchasing staff) to make payments to suppliers. For this expenditure to be recognized by the Tax authorities as a non-cash payment, thus qualifying for VAT deduction and inclusion in deductible expenses during tax settlement, accounting records must include a clear and transparent authorization document.
2. Application Instructions
Accountants need to establish and maintain a Power of Attorney document at the time a transaction occurs. Preparing complete and timely documentation is a core legal basis that helps businesses proactively explain transactions, avoid the risk of expense disallowance, and prevent the exclusion of input VAT during audits and inspections.
