Transfer of Tax Losses in OECD and BRICS Countries

For a number of reasons, businesses are not always profitable and can often be loss making. Thus, the carryforward of tax losses is a common practice across the world. According to the tax statistics (form No. 5-P), during the economic crisis of 2014–2015, the cumulative balance of unutilized corporate tax losses in the Russian Federation as a whole increased dramatically. Moreover, there was no significant decrease in its volume in the following years of 2016–2018. In 2014–2018, the cumulative balance of unutilized corporate tax losses became comparable with the annual corporate tax base. Under these circumstances, the Russian Ministry of Finance put restrictions on the carryforward of tax losses. For the period from January 1, 2017 to December 31, 2021, only up to 50 % of the corporate tax base for the year could be offset against the tax losses carried forward. It is obvious that the restrictions on the utilization of tax losses affect the position of businesses in terms of taxes. In the meantime, it has been repeatedly articulated by the Russian President and the Government that the tax burden should not be raised and the tax conditions should be stable. In these circumstances, it is of current interest to analyze whether the Russian conditions of tax loss carryforward are unique or similar to international practice. In this regard, the analysis of international trends on tax loss carryforward and their comparison with Russian practice are of academic interest.