In the audit of a Hong Kong company, can the loss of the current year be made up by the taxable income of the following year? We all know the mainland enterprise income tax general enterprises have5Years to make up for the period, and high-tech enterprises are currently extended to10Annual catch-up period. How about making up losses in Hong Kong?

In Hong Kong, as long as the loss is caused by the company's normal business activities, it can be made up indefinitely, while the loss caused by the abnormal business activities can not be made up. What is a loss from normal business activities? The Hong Kong Tax Bureau believes that the company has normal operating income and operating costs in the current year, so that the loss can be made up with taxable income in the future year indefinitely. On the contrary, if the company has no operating income and only expenses in the current year, then the loss thus incurred cannot be covered by the taxable income in subsequent years, because the Hong Kong Inland Revenue Department considers that the company did not operate normally in the current year.

In the audit of Hong Kong companies, there is another kind of loss that cannot be made up by the taxable income in the following years, that is, the overseas loss (commonly known as offshore loss) formed by the company in the current year. Because in Hong Kong, overseas profits are not covered by the profits tax, so the loss naturally cannot be set aside, which reflects the principle of consistent taxation.

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