The Nigerian Tax Laws
provide that tax losses of current period may be used to reduce or eliminate
tax to be paid in future periods. However, in the cases of cessation of
business, such losses may be used to reduce or eliminated tax payable in the
current periods. The companies’ income. Tax Act, 1979 allows maximum carry
forward period of our years. The use of a current loss to reduce or eliminate
tax payable or paid in earlier periods is not allowed except in the year of
cessation of business.
provide that tax losses of current period may be used to reduce or eliminate
tax to be paid in future periods. However, in the cases of cessation of
business, such losses may be used to reduce or eliminated tax payable in the
current periods. The companies’ income. Tax Act, 1979 allows maximum carry
forward period of our years. The use of a current loss to reduce or eliminate
tax payable or paid in earlier periods is not allowed except in the year of
cessation of business.
Tax losses result in tax
savings provided there is taxable income against which the losses could be
relieved. Consequently, such potential tax saving relating to a tax loss carried
forward may be included in the income statement.
savings provided there is taxable income against which the losses could be
relieved. Consequently, such potential tax saving relating to a tax loss carried
forward may be included in the income statement.
Since the tax laws limit
the period over which a tax loss may be carried forward for offset against
future taxable income, only the related timing differences that will reverse
during the period are considered in computing deferred taxes and treated either
as a debit balance or as a debit to the deferred tax account.
the period over which a tax loss may be carried forward for offset against
future taxable income, only the related timing differences that will reverse
during the period are considered in computing deferred taxes and treated either
as a debit balance or as a debit to the deferred tax account.
The tax saving that results
from offsetting a tax loss is included in the net income.
from offsetting a tax loss is included in the net income.