Core Viewpoint - The article discusses the tax deduction policy for loan loss provisions related to agricultural loans and small and medium-sized enterprises (SMEs), aimed at alleviating the financial burden on financial institutions and supporting the growth of the real economy [1]. Summary by Sections Loan Loss Provision Deduction - Financial institutions are allowed to deduct 1% of the total loan balance as a loan loss provision for general loans, calculated as: Tax-deductible loan loss provision = Year-end loan asset balance × 1% - Year-end previously deducted loan loss provision balance [1]. Special Deduction for Agricultural and SME Loans - For agricultural loans and SME loans, financial institutions must classify these loans according to the "Loan Risk Classification Guidelines" and can deduct provisions based on the following percentages: - Attention category loans: 2% - Substandard category loans: 25% - Doubtful category loans: 50% - Loss category loans: 100% [2]. Types of Loans Eligible for Special Deduction - The two types of loans eligible for special tax deductions are: 1. Agricultural loans, which include loans to farmers and loans to rural enterprises and organizations [3]. 2. Loans must be accurately classified and separately accounted for to qualify for the special tax deduction [4]. Compliance and Reporting Requirements - Financial institutions must ensure accurate risk classification and cannot misclassify hidden non-performing loans as "normal" while calculating provisions [5]. - Loans classified as agricultural and SME loans must be distinctly identified and accounted for separately to enjoy the special tax deduction benefits [5]. - The reporting of loan loss provisions must be done correctly in the tax return forms [5].