E – Provisions

Provisions constituted to meet clearly specified losses or charges rendered probable by the course of events, provided that they are shown in the annual accounts and appear in the statement of provisions specified in Section 18 hereafter.

Concerning credit establishments, with the exception of provisions for bad debts whose allocation is optional, the deduction of provisions for bad debts and doubtful commitments shall be effected as follows:

– two years for bad debts and doubtful commitments whose risks are not covered either by collateral securities or State guarantee. In this case, deduction may not exceed 50% of bad debts and commitments per annum;

– three years for bad debts and doubtful commitments whose risks are not covered by collateral secur ities. In this case, deductions may not exceed:

• 25 % for the first year,
• 50 % for the second year,
• 25 % for the third year.

The situation of these provisions must be definitely determined at the end of the third year of their constitution, with the exception of those which concern bad debts and doubtful commitments brought before law courts. The technical provisions of insurance companies, constituted in accordance with the rules and methods prescribed by the code of the inter-african Conference on Insurance markets (CIMA). In no event shall any provision be constituted for charges accountable, by their nature, in the year in which they are incurred.

F – Claims and debts expressed inforeign currency

Losses incurred during exchange transactions may not require the accumulation of deductible provisions. However, currency conversion margins, claims and debts expressed in foreign currencies, as opposed to the amounts initially entered into the accounts, shall be assessed at the end of each financial year, taking into account exchange rates which are used to determine the taxable turnover for the financial year. Currency conversion margins concerning less than one yearold debts expressed in foreign currencies shall be deductible in determining the taxable turnover for the same financial year.

But currency conversion margins concerning long-term debts expressed in foreign currencies shall be deductible at the rate of actual reimbursements.

The same shall be true for short and medium term claims.