Proposal to Allow Period of Loss Carry-forward from 5 years to 10 years
The Ministry of Finance recently stated that in response to the tendency for a modern business to experience longer durations before turning profits the Ministry of Finance has proposed an amendment to the current tax laws to revise the current 5-year limitation of carrying forward losses of previous years to a 10-year limitation. Once implemented, many sectors will benefit and in particular, the bio-tech sector where longer periods for R&D are typically required before the operations can begin turning profits. This recommendation by the Ministry of Finance has been based on data from U.S. and Japan where there is a 20-year and 7-10 year limitations respectively, although Mainland China and Korea both have a 5-year limitation. In this proposed amendment, there would be no exclusions as to any particular industry sector but would be generally applicable to all businesses that meet certain objective criteria.