The basic definition of enterprise income tax to make up for losses in previous years

Article 11 of the Provisional Regulations of the People's Republic of China on Enterprise Income Tax stipulates that if a taxpayer incurs an annual loss, he or she may use the income of the next tax year to make up for it; If the income in the next tax year is insufficient to make up for it, it may be renewed year by year, but the maximum period of compensation shall not exceed five years.

Article 28 of the Detailed Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Enterprise Income Tax stipulates that the period for making up losses refers to the losses incurred by taxpayers in a certain tax year and are allowed to make up for them with the taxable income of the following years; If it makes up for the deficiency in one year, it can be continued to make up for it year by year; The maximum compensation period shall not exceed five years, and whether the taxpayer makes a profit or a loss within five years, it shall be calculated as the actual compensation period.

The notice of the State Administration of Taxation on several business issues of enterprise income tax (Guo Shui Fa No. 250 1994) stipulates that the concept of loss referred to in the tax law is not the amount of loss reflected in the financial statements of the enterprise, but the amount of the loss in the financial statements of the enterprise after verification and adjustment by the competent tax authorities in accordance with the provisions of the tax law.

The notice of the State Administration of Taxation on several business issues of enterprise income tax (Guo Shui Fa No. 1997 No. 191) stipulates that the part of the income increased by the tax authorities on taxpayers cannot be used to make up for the losses of previous years.

Losses incurred in previous years are allowed to be made up with the taxable income of the following years, and if the deficiency is made up in one year, it can be made up continuously year by year, and the maximum compensation period shall not exceed 5 years, and whether it is profit or loss within 5 years, it shall be calculated as the actual recovery period.

For example, a loss of 100 in 2000, a profit of 10 in 2001, a profit of 10 in 2002, a profit of 10 in 2003, a profit of 10 in 2004, a profit of 10 in 2005, and a profit of 10 in 2006 can only be made up until 2005, and the remaining 50 of the loss can not be made up.

To make up for the loss, it is filled in once a year and paid in the final settlement.

is reflected in the annual report. You don't need to fill in the quarterly report.

In general, when the declaration form is filled, it will be automatically extracted, and there is no need to enter it manually. If it is not automatically generated, an initialization operation can be performed, and the amount that can be used to cover the loss of previous years is displayed in the initialization information.

If the loss of 500,000 yuan in the previous year is made, the loss of 500,000 yuan in the first quarter report should be made up, and the column of 500,000 yuan should be filled in to make up for the loss of the previous year. In the first quarter, 190,000 yuan was declared and no quarterly income tax was paid, and the compensation continued in the second quarter. The actual profit for the period is -100,000 yuan, and no income tax is paid.

According to line 8 of the announcement of the State Administration of Taxation on the issuance of the monthly (quarterly) prepayment tax return of the People's Republic of China for enterprise income tax (Announcement No. 64 of 2011 of the State Administration of Taxation), "make up for the losses of previous years": fill in the amount of losses that have not been made up in previous years that can be made up before the enterprise income tax in accordance with the tax regulations.

Therefore, the number of the current period in line 8 is filled in the number of losses made up in the third quarter of the previous year, not the accumulated profit of the current year, and the "cumulative amount" in line 8 is filled in the number of losses actually made up in the previous years in the first three quarters.

According to the Notice on Issues Concerning the Filling of Monthly (Quarterly) Advance Tax Returns for Enterprise Income Tax (Guo Shui Han [2008] No. 635), the actual profit amount = the total profit of the current year, the previous uncovered loss, the non-taxable income, and the tax-exempt income.

In the new corporate income tax return Category A, the amount of the current quarter's profit is entered in the line to cover the loss of the previous year, and the same is true for each subsequent quarter. It is not until the loss in the final settlement is made up that the enterprise income tax is paid.

Article 5 of the Enterprise Income Tax Law of the People's Republic of China stipulates that the total income of an enterprise in each tax year shall be the taxable income after deducting the non-taxable income, tax-exempt income, various deductions and allowable losses of previous years.

Article 18 stipulates: "Losses incurred in the tax year of an enterprise shall be allowed to be carried forward to subsequent years and made up with the income of the following years, but the maximum period of carry-forward shall not exceed five years." ”

Both of the above provisions state that an enterprise can use its pre-tax income to cover its losses in previous years (the previous five years). To be clear here:

Losses of previous years that are allowed to be made up" and "the maximum period of carry-forward shall not exceed five years", and the time allowed to be made up shall not exceed five years. For example, if an enterprise loses 500,000 yuan in 2008, it will have 50,000 yuan in 2009, 70,000 yuan in 2010, 90,000 yuan in 2011, 120,000 yuan in 2012, and 150,000 yuan in 2013 before making up for the loss in the next five years.

Therefore, from 2008 to 2013, there was no need to pay corporate income tax, and a total of 480,000 yuan of losses were made up for in five years, and there was a loss of 20,000 yuan left. In the sixth year, that is, in 2014, the previous income of 180,000 yuan will be made up. Can you make up for the loss of 20,000 yuan in 2014?

The answer is no. Because the tax law stipulates that it can only be made up within five years after the loss year, in the sixth year, if the loss before five years has not been made up, it cannot be made up before tax, and can only be made up with after-tax profits.

According to the enterprise income tax regulations, the losses incurred by an enterprise in the tax year are allowed to be carried forward to the following years and made up with the income of the following years, but the maximum carry-forward period shall not exceed five years. The total income of an enterprise in each tax year is the taxable income after deducting the non-taxable income, tax-exempt income, various deductions and allowable losses of previous years.

The losses incurred by the enterprise in previous years are shown in the accounting"Profit distribution - undistributed profits"The debit balance of the account, whether the profit before tax or the profit after tax of the current year is used to cover the loss of the previous year, can be processed by deducting the profit distribution at the beginning of the year - the debit balance of undistributed profits, so there is no need to make accounting adjustments.

If a company incurred a loss of 150,000 yuan in the previous year, it can be made up for by the pre-tax profit of the following year according to the regulations, and the total profit of the current year is 580,000 yuan. In the current year, the income tax was paid 10,000 yuan [(58-15) 33%].

What are the ways in which companies can make up for income tax losses?

There are three main ways for businesses to make up for their losses:

1.If an enterprise incurs a loss, it can be made up with the pre-tax profit of the next year, and if the profit of the next year is insufficient to make up for it, it can continue to make up for it within 5 years. This article will focus on the income tax accounting treatment under this method.

2.If the pre-tax profit of the enterprise is insufficient or the loss is made up for the loss within 5 years, the after-tax profit shall be used to make up for the loss. Deferred income tax is not recognized in this way. Under the tax law, the balance of the loss cannot be deducted when calculating the taxable income.

3.The losses incurred by the enterprise can be covered by surplus reserves. Debits"Surplus reserve"Accounts, credits"Profit distribution - surplus reserve to make up for losses"Subjects.

What about the income tax treatment of recoverable losses in previous years? In fact, through the teacher's accounting treatment of the company's previous annual losses that need to be made up, I believe you all know that you can use the accounts of this year's undistributed profits to make up for the processing, and the corresponding accounting entries can be accounted for through the accounts of profit distribution.