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.
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Sir,
For some question, we have to calculate tax on losses made and thus giving us ‘positive’ tax while others mention that loss can be carried forward.
Do we calculate tax in a way as i firstly mentioned if theres no mention of tax forward?
Thank you sir
I explain this in my free lectures!!
If the investment is in the same country, we always assume that we are already making profits and therefore already paying tax. So if the new project makes a ‘loss’ then it simply reduces the existing profit of the company and therefore results in a tax saving.
However if the investment is in a foreign country (as it very often is in the exam) then tax is calculated separately in the foreign country and a loss then means no tax payable but the loss is carried forward and reduces the taxable profit in future years.
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Thank you!
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