Answer: According to Article 10 of the "Interim Regulations of the People's Republic of China on Value-Added Tax", the input tax on the following items shall not be deducted from the output tax: (1) For non-value-added tax Purchased goods or taxable services for taxable items, VAT-exempt items, collective welfare or personal consumption; (2) Purchased goods and related taxable services with abnormal losses; (3) Work in progress with abnormal losses , purchased goods or taxable services used in finished products; (4) consumer goods for taxpayers’ own use as stipulated by the financial and taxation authorities of the State Council; Article 24 of the Implementing Rules stipulates that Article 10 (2) of the Regulations Abnormal losses refer to losses caused by theft, loss, mold and deterioration due to poor management. According to the above regulations, in terms of value-added tax treatment, the losses caused by your company's production of substandard products are not abnormal losses and do not need to be transferred out as input tax. According to Article 8 of the Enterprise Income Tax Law, actual and reasonable expenses incurred by an enterprise related to the acquisition of income, including costs, expenses, taxes, losses and other expenses, are allowed to be deducted when calculating taxable income. Article 32 of the Implementation Regulations stipulates that the losses mentioned in Article 8 of the Enterprise Income Tax Law refer to the inventory losses, damage, and scrapping losses of fixed assets and inventories, losses of transferred properties, losses of bad debts, and bad debts that occur during the production and operation activities of the enterprise. Losses, losses caused by force majeure factors such as natural disasters and other losses, losses incurred by the enterprise, the balance after deducting the compensation of the responsible person and insurance compensation, shall be deducted in accordance with the regulations of the financial and taxation authorities of the State Council. According to Article 1 of the Notice No. 57 Cai Shui [2009] on the pre-tax deduction policy for enterprise asset losses, the asset losses mentioned in this notice refer to the asset losses actually incurred by the enterprise in the production and operation activities and related to the acquisition of taxable income. , including cash losses, deposit losses, bad debt losses, loan losses, equity investment losses, fixed assets and inventory losses, damage, scrapping, theft losses, losses caused by force majeure factors such as natural disasters, and other losses, Article 13 It stipulates that for various asset losses deducted by an enterprise, it shall provide legal evidence that can prove that the asset losses have actually occurred, including legally effective external evidence, economic verification certificates from intermediaries with statutory qualifications, and Technical appraisal certificates from professional institutions, etc. According to the relevant provisions of the Enterprise Income Tax Law, for the above-mentioned losses incurred by your company, you must provide legal evidence that can prove that the asset losses have actually occurred, including legally effective external evidence, economic verification certificates from intermediaries with statutory qualifications, Technical appraisal certificates from professional institutions with legal qualifications, etc., will be deducted when calculating taxable income.