Accumulated losses brought forward for tax on income / profit 

Utilization of Accumulated losses brought forward for tax on income / profit

---

If a company has accumulated losses brought forward from previous years, these losses can be utilized against future taxable income and can be carried forward for up to five years.

The accumulated tax losses can be carried forward and against future taxable income for tax on profit (income) if all of the following conditions are met:

1. There is no change in the business activities of the entity;
2. There is no change in the ownership of the entity;
3. The loss is recorded in the tax return submitted to the tax administration within the period of time as specified in the tax provisions; and
4. General Department of Taxation (GDT) in Cambodia has not issued a unilateral tax assessment for any of the tax years in question.

Example 1

ABC is a company incorporated in Cambodia since 20 March 2011.

Under the tax regulations, ABC Company is required to calculate and pay annual tax on profit (income) at 20% rate.

Assume Profit during 2019 Per Law on Cambodia Tax (E39) is $40,000.

Table of Tax Accumulated Losses Carried Forward since 2011 is as follows.

Year	Taxable Profit During the Period	Taxable Loss During the Period
2011		20,000
2012		10,000
2013		10,000
2014		20,000
2015	40,000
2016		20,000
2017	20,000
2018	16,000

Required

1.Calculate deductible accumulated losses brought forward (E40) to deduct from $40,000 (above).

2. Fill Table of Tax Accumulated Losses Carried Forward

Answer

1.Calculate deductible accumulated losses

Based on Table of Tax Accumulated Losses Carried Forward above, we can summarize figures as follows.

-First profit in 2015 is $40,000 and accumulated losses before 2015 are $60,000 ($20,000 +$10,000 + $10,000 + $20,000). Losses $40,000 of $60,000 can deduct from $40,000, so remaining loss $20,000 ($60,000-$40,000) in 2014 will be against future taxable income.

-Second profit in 2017 is $20,000 , so remaining loss $20,000 in 2014 can deduct from second profit in 2017.

-Third profit in 2018 is $16,000 and  loss in 2016 is $20,000. Loss amount $16,000 of $20,000 can deduct from third profit in 2018, so remaining loss $4,000 ($20,000-$16,000) in 2016 can deduct from fourth profit $40,000 in 2019.

In conclusion,loss amount $4,000 from previous years can deduct from profit $40,000 in 2019.

2. Fill Table of Tax Accumulated Losses Carried Forward