 |
| How to determine losses and transfer corporate income tax losses in 2023. (Source: Lawnet) |
Enterprises with losses from real estate transfer activities, investment project transfer, and transfer of rights to participate in investment projects after offsetting according to the provisions of Clause 3, Article 7 of the Law on Corporate Income Tax (CIT) 2008, if still at a loss, and enterprises with losses from mineral exploration and exploitation rights transfer activities, may transfer the loss to the following year into the taxable income of such activities. The loss transfer period shall not exceed five years, starting from the year following the year in which the loss arose.
How to determine losses and transfer corporate income tax losses in 2023
Determining losses and transferring corporate income tax losses is carried out according to the instructions in Article 9 of Circular 78/2014/TT-BTC and Article 7 of Circular 96/2015/TT-BTC, specifically as follows:
(1) Losses arising in the tax period are the negative difference in taxable income excluding losses carried forward from previous years.
(2) If an enterprise incurs a loss after tax settlement, it shall continuously and entirely transfer the loss to the income (taxable income minus tax-exempt income) of the following years. The period of continuous loss transfer shall not exceed 5 years, starting from the year following the year in which the loss occurred.
Enterprises temporarily transfer losses to income of the following quarters when preparing the quarterly provisional tax declaration and officially transfer them to the following year when preparing the annual tax finalization declaration.
Example 1: In 2022, enterprise A incurred a loss of 10 billion VND, in 2023, enterprise A incurred an income of 12 billion VND, then the total loss incurred in 2022 is 10 billion VND, enterprise A must transfer the entire amount to income in 2023.
Example 2: In 2022, enterprise B incurred a loss of 20 billion VND, and in 2023, enterprise B incurred an income of 15 billion VND, then:
+ Enterprise B must transfer the entire loss of 15 billion VND to income in 2023;
+ The remaining loss of 5 billion VND, enterprise B must monitor and continuously transfer the entire amount according to the above principle of transferring losses of 2022 to the following years, but not more than 5 years, from the year following the year of loss.
- Enterprises with losses between quarters in the same fiscal year are allowed to offset the losses of the previous quarter to the following quarters of that fiscal year. When finalizing corporate income tax, enterprises determine the losses of the entire year and continuously transfer the entire loss to the taxable income of the years following the year in which the loss occurred according to the above provisions.
- Enterprises shall determine the amount of loss to be deducted from income according to the above principles. In case there is a further loss arising during the loss carryover period, the loss arising (excluding the loss carried over from the previous period) shall be carried forward in full and continuously for no more than 5 years, starting from the year following the year in which the loss arises.
In case the competent authority inspects and audits the corporate income tax finalization and determines that the amount of loss that the enterprise is allowed to transfer is different from the amount of loss determined by the enterprise itself, the amount of loss to be transferred shall be determined according to the conclusion of the inspection and audit agency, but must ensure that the loss is transferred in full and continuously for no more than 5 years, starting from the year following the year in which the loss arises as prescribed.
After 5 years from the year following the year in which the loss occurred, if the loss has not been fully transferred, it will not be transferred to the income of the following years.
(3) Enterprises that convert their business type, merge, consolidate, divide, separate, dissolve, or go bankrupt must make tax settlements with tax authorities up to the time of the decision to convert their business type, merge, consolidate, divide, separate, dissolve, or go bankrupt by a competent authority (except in cases where tax settlement is not required according to regulations).
The losses of an enterprise arising before conversion, merger or consolidation must be monitored in detail by year of occurrence and offset against the income of the same year of the enterprise after conversion, merger or consolidation or continue to be transferred to the income of the following years of the enterprise after conversion, merger or consolidation to ensure the principle of continuous loss transfer for no more than 5 years, starting from the year following the year of loss occurrence.
The loss of an enterprise arising before the division or separation into another enterprise and still in the loss transfer period according to regulations will be allocated to the enterprises after the division or separation according to the ratio of the divided or separated equity capital.
Source
Comment (0)