The finance and tax questions manufacturers ask most

What is the risk of other payables that stay open for years?

Payables that are long outstanding and genuinely cannot be paid must be taken into income for corporate income tax; if the balance hides off-book money flows, the use of funds will also be traced.

Article 22 of the Implementation Regulations of the Corporate Income Tax Law lists "payables that genuinely cannot be paid" as other income.
Typical signs: the balance only grows, the counterparty is unclear, and there are frequent flows with shareholders' personal accounts.
M03 transaction substance and use of funds reviews open balances and maps where the money went.

This page is general information only and is not tax, legal or accounting advice on any particular matter. Policy references reflect the documents in force at the time of writing; how they apply depends on the company's facts and on the local tax authority.

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