Can I carry forward tax losses in Hong Kong?

A business loss for tax purposes (the adjusted loss in your tax computation) is not refunded; instead:

• Companies: the loss is carried forward and set against future assessable profits of that trade. A corporation carrying on more than one trade can set a loss in one trade against profits of the other.
• Sole proprietors and partners: a loss can be carried forward against future profits of the same business, if the person has not elected personal assessment for the loss year. If they elect personal assessment, the loss can be set against total income instead.
• No carry-back to earlier profitable years.
• No time limit is stated in the Inland Revenue Department's (IRD's) guidance for carrying a loss forward.

Practical points

• Report the loss in the return (the "adjusted loss") and keep it separate from losses brought forward; the return shows the current-year figure only.
• If you expect a loss, you may be able to hold over provisional tax.
• Anti-avoidance rules (section 61B, explained in IRD practice note DIPN 15) can limit loss relief in certain arrangements, such as buying a company mainly to use its losses.
• Losses on concessionary activities have special rules.

For an M-code business with a current-year loss, a further return extension may be available (see the block extension answer).