In line with the 2020 Budget Announcement, Government proposes to broaden the corporate income tax base by restricting the offset of the balance of assessed losses carried forward to 80% of taxable income.
The proposal extends to the balance of assessed losses at the time of implementation, i.e. it is not only the accumulation of losses starting from the date of implementation that will be subject to the new rules. This will contribute to providing the fiscal room for Government to lower the corporate tax rate.
The effect of the proposed restriction is that only companies that would be in a positive taxable income position before setting off the balance of assessed losses will be affected.
The table below provides an overview of four potential combinations of taxable profit/loss positions combined with whether there is an assessed loss balance or not.