Hong Kong Taxation lossess

usually, we treated the taxable loss as a non-asset nor liability.
Only the period loss / year loss will be shown on P&L and Balance sheet.

So, if we have a taxable loss after the tax computation, there will be no entry for the accounting treatment, because we're not to pay any tax within the financial year.
We can set-off the provision for tax, if we had prepaid tax in previous year, which is a Balance sheet item. So we can only make entry, if there is any return of prepaid tax.

e.g the tax paid in year1 (include prepayment) is $10000 and the prepayment is $3000, it should be a current asset in balance sheet ($3000)

in year 2, if we have suffer a loss , and no taxation to be paid in this year, we should take the entry when we get back the prepayment of $3000 from the Goverment .
(the entry will be Dr. Bank $3000,
Cr. Tax refundable $3000)

actually, if there only a loss in this year, and no other profit/loss in previous year,
we don't need take any entry for provision of loss

According to HKSA 12 http://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/hkas12.pdf ,
deferred tax assets arising from unused tax losses or unused tax credits can be recognised.
Deferred Tax assets = Unused tax losses x tax rate or
Deferred tax liabilities or assets = Taxable or deductible temporary differences x tax rate
where Taxable or deductible temporary differences = Carrying amounts of assets or liabilities - Tax bases of assets or liabilities
The only concerns is that whether the tax loss can be used to offset the future profit taxes. So normally some forecast will be performed to estimate the future profit and loss of the organization, if the organization cannot utilize the tax losses or can only utilize part of the tax losses in the forseable future (say 3-5 years), no deferred tax assets will be provided or only deferred tax assets will be provided to the extent that the tax losses will be used in the forseable future.
Further description can be found in the reference site (PDF format).

1. It is the common practise of the IRD not to confirm your loss position. Your computation do not necessary agreed with the final assessments by IRD.
2. According to HKAS1, on prudence concept, we do not include such contingent assets.
3. Deferred tax assets refer to timing difference between accounting profit and tax profit times the applicable tax rate. In this case, I do not see the relevance of HKAS 12.
4. Please ensure that you keep all your accounting records beyond 7 years until you have final assessments with IRD. I have seen cases whereby the IRD did not raise final assessments beyond 7 years. If you did not keep old records, they will not agree with your 'alleged' losses.
Hope it can be of help!

Yes, we call this item as deferred tax assets

Please refer HKAS 12

further question, welcome e-mail to [email protected]