05-26-2011, 09:11 PM
The query is not fairly explained, therefore, the reply may not be too precised.
In my view the tax losses arising and accumulating during the period in which the company remains tax exempted, cannot be carried forward and adjusted against the profits of the year when the company will be taxable.
As explained above, the tax losses of exempted period cannot be adjusted while determining the deferred tax.
As far as deferred tax is concerned, you can refer to the recognition principles of "provision" enumerated in IAS-37 as well as deferred tax's recognition as per IAS-12.
The answer to the query that whether or not deferred tax liabilities (or asset) should be estimated and provided during the exempted period, depends upon detailed assessment and working because the tax exemption is not available in perpetuity. The company has to be taxable in fourth year. Therefore, if the wroking calls for providing the deferred tax liability, it should be provided without adjusting the exempted period's tax losses.
Regards,
In my view the tax losses arising and accumulating during the period in which the company remains tax exempted, cannot be carried forward and adjusted against the profits of the year when the company will be taxable.
As explained above, the tax losses of exempted period cannot be adjusted while determining the deferred tax.
As far as deferred tax is concerned, you can refer to the recognition principles of "provision" enumerated in IAS-37 as well as deferred tax's recognition as per IAS-12.
The answer to the query that whether or not deferred tax liabilities (or asset) should be estimated and provided during the exempted period, depends upon detailed assessment and working because the tax exemption is not available in perpetuity. The company has to be taxable in fourth year. Therefore, if the wroking calls for providing the deferred tax liability, it should be provided without adjusting the exempted period's tax losses.
Regards,