Two years of losses, a profit in the third: how does carrying a loss forward reduce corporate profit tax, and why is it not taken into account in quarterly calculations?
A company making plastic containers closed 2024 and 2025 with a loss and moved into profit in 2026. In what order are losses carried forward under Article 333 of the Tax Code, how much tax is saved, what happens to the tax paid for the quarters, and in which cases is a loss not carried forward: a calculation year by year.
"Qorako'l Plast" LLC makes plastic containers for food. 2024, when a new line was launched, and 2025, when raw materials became more expensive, both closed with a loss. In 2026 sales grew and the company made a profit for the first time. The director asks: will the loss of the past two years now bring any benefit? The answer is in Article 333 of the Tax Code.
What is a loss for tax purposes and how does it differ from an accounting loss?
Part one of Article 333 defines a loss as follows: if, after the adjustments for corporate profit tax, deductible expenses exceed aggregate income, that excess is the taxpayer's loss. So this is not about the loss in the statement of financial results but about the loss calculated for corporate profit tax. The two need not be equal: amounts that are an expense in the accounts but are not deductible from the tax base reduce the tax loss.
Part two clarifies a special case: losses on traded securities and traded financial instruments of futures transactions are recognized as a loss from business activity.
In what order is a loss carried forward?
The current text of the article (Article 333) contains three main rules:
- a taxpayer with a loss from a previous period (periods) is entitled to reduce the current period's profit by all or part of that loss (part three);
- the tax base is reduced by prior years' losses only at the end of the current tax period;
- if losses were incurred over several years, they are carried forward in the order in which they were incurred (starting with the earliest).
Parts four and five of the article were deleted by Law No. ZRU-741 of 29 December 2021. So check any conditions you find in old manuals or articles against the current text.
Tax figures of "Qorako'l Plast" (hypothetical):
| Year | Result for tax purposes, soum |
|---|---|
| 2024 | loss 90 000 000 |
| 2025 | loss 40 000 000 |
| 2026 | tax base before carrying the loss forward 110 000 000 |
Under the order rule, the 2024 loss is used first, then the 2025 loss:
| Step | Calculation | Amount, soum |
|---|---|---|
| 2026 tax base (without the loss) | 110 000 000 | |
| 2024 loss used in full | min(90 000 000; 110 000 000) | 90 000 000 |
| Used from the 2025 loss | 110 000 000 − 90 000 000 | 20 000 000 |
| Final 2026 tax base | 110 000 000 − 90 000 000 − 20 000 000 | 0 |
| Remaining from the 2025 loss for later years | 40 000 000 − 20 000 000 | 20 000 000 |
The rate is 15 percent (Article 337, part one, item 12: other taxpayers). Without carrying the loss forward, the tax for 2026 would be 110 000 000 × 15% = 16 500 000 soum. With the loss carried forward in full, the tax is 0.
The company may also use only part of the loss. For example, if 60 000 000 soum is used, the tax is (110 000 000 − 60 000 000) × 15% = 7 500 000 soum, and 30 000 000 soum of the 2024 loss plus the whole 2025 loss remain for later years. How much to use is the company's decision, but the order still starts with the earliest loss.
If the tax base in 2027 is 50 000 000 soum, the remaining 20 000 000 soum is deducted: (50 000 000 − 20 000 000) × 15% = 4 500 000 soum.
What happens to the tax paid for the quarters?
For corporate profit tax the tax period is the calendar year and the reporting period is the quarter (Article 338). Tax for a reporting period is calculated on a cumulative basis from the start of the year (Article 339). But the loss is deducted only at the end of the year (Article 333: the tax base is reduced by prior years' losses only at the end of the current tax period). As a result, tax for the quarters is calculated without taking the loss into account.
| Period | Tax base from the start of the year, soum | Is the loss deducted | Tax calculated (cumulative), soum |
|---|---|---|---|
| 9 months | 80 000 000 | No | 12 000 000 |
| Year | 110 000 000 − 110 000 000 = 0 | Yes | 0 |
The 12 000 000 soum calculated and paid for nine months turns out to be overpaid tax at the end of the year. An overpaid tax amount is the positive difference between the amount paid and the amount actually payable (Article 60), and it is offset or refunded under Articles 103 and 104. So allow in your financial plan for this money being "tied up" during the year. In the accounts the tax on profit accrued during the year is recorded with the entry Dt 9810 – Ct 6410 (NAS No. 21, paragraph 275, line 6 and paragraph 434, line 1).
In which cases is a loss not carried forward or carried forward separately?
Article 333 itself states one prohibition: losses of a subsidiary receiving bad debts from its parent bank are not carried forward to future periods. The other special cases are in Articles 334–336:
| Situation | Rule | Article |
|---|---|---|
| Reorganization | The loss is divided among the legal successors in proportion to the share of assets transferred under the separation balance sheet; if the legal successor itself is reorganized, losses it previously took over from a taxpayer that ceased activity are not carried forward | Article 334 |
| Consolidated group | The group's loss reduces the group's consolidated base; a participant that leaves the group cannot deduct the loss for the period in the group from its own base | Article 335 |
| Sale of an enterprise as a property complex or of a share in the authorized fund | The loss is covered only from income from the sale of similar assets | Article 336 |
| Trust management | The loss is not taken into account in the founder's base and is carried forward to future income from that management | Article 336 |
| Simple partnership | The partners' loss is carried forward by the trustee to the partnership's future income | Article 336 |
| Service facilities | The loss is not taken into account in the business base and is carried forward to the future income of those facilities | Article 336 |
| Non-traded securities and futures transactions | The loss is determined separately and covered from income from such transactions | Article 336 |
Test yourself
5 questions on this topic: pick an option or reveal the answer.
In 2027, "Shahrisabz qandolat" LLC submitted its profit tax return for 2026 to the tax authority. Under Article 84, part 1, of the Tax Code (assume no other rule applies), until at least what date must it keep this return and its attachments?
Under the Tax Code, what are the tax period and the reporting period for corporate profit tax?
"Sayram choy" LLC accrued dividends of 30 000 000 soum to an individual who is its participant and a non-resident of Uzbekistan (assume no relief under an international treaty applies). Applying the rate in Article 382 of the Tax Code, how much personal income tax is withheld at source?
"Ohangaron plitka" shipped tiles to a buyer on 28 October, issued the invoice on 3 November, and the buyer transferred the money on 10 November. Under Article 242 of the Tax Code, on what date is the turnover from the sale of the goods deemed to take place for VAT purposes?
After the tax payment deadline had passed, the accountant of "Bekobod sement savdo" found an error on his own that had understated the tax in the return. Under Article 83 of the Tax Code, in which case is the company released from liability if it files an amended return?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Tax Code of the Republic of Uzbekistan, Article 333 · definition of a loss (deductible expenses exceeding aggregate income); losses on securities and futures transactions; right to reduce the current period's profit by all or part of the loss; only at the end of the tax period; in the order incurred; a subsidiary receiving bad debts from its parent bank; reference to Articles 334–336; parts four and five deleted by Law ZRU-741
- Tax Code of the Republic of Uzbekistan, Articles 334, 335 and 336 · special rules for carrying losses forward on reorganization, in a consolidated group and for certain types of transactions
- Tax Code of the Republic of Uzbekistan, Article 337, part one, item 12 · corporate profit tax rate for other taxpayers 15 percent (as amended by ZRU-1108, from 1 January 2026)
- Tax Code of the Republic of Uzbekistan, Articles 338 and 339 · the tax period is the calendar year, the reporting period is the quarter; calculation on a cumulative basis from the start of the tax period
- Tax Code of the Republic of Uzbekistan, Articles 60, 103 and 104 · the concept of an overpaid tax amount; offset or refund of overpaid tax
- NAS No. 21 "Chart of Accounts for Accounting of Business Entities and Instructions for Its Application": paragraph 275 (line 6), paragraph 434 (line 1) · Dt 9810-9890 – Ct 6410 accrual of payments to the budget from profit; Dt 9810, 9820 – Ct 6410 amounts accrued during the year
- Example, company name and amounts · compiled by the author, hypothetical