Please let us about transfer losses when separating enterprise?
On 27 November 2007, the General Department of Taxation issued Official Letter No.4955/TCT-CS guiding on transfer losses when separating enterprise. Accordingly, transfer losses when separating enterprise is based on the below foundations:
- Separation enterprise means transfer a part of current company assets (separated company) in order to set up a new company or new companies at the same types (separating company) without termination the existence of separated company; and
- If enterprise still makes losses after drawing the balance-sheet, such enterprise shall transfer and deduct losses from the taxable earnings of following years.
From the above-mentioned foundations, it concludes that separated company shall transfer and deduct losses from the taxable earnings of the following years if such company still makes the loss after separating enterprise.
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