On 2 July 2020, the Supreme Court issued a decision against the tax authorities regarding statute of limitations period extension.
On 25 November 2015, the tax authority started a tax inspection concerning the taxpayer’s corporate income tax liability for the 2013 tax period. Basically, taxpayer reported a tax loss in 2013 tax period. The last tax period in which the taxpayer could claim the tax loss was 2018. According to a special provision of the Income Tax Act, the period for assessing tax ended on the same date as deadline for assessing tax for 2018. The high court pointed out that the maximum period for assessing tax is generally limited to 10 years, and in the present case would end 1 April 2024.
Finally, the Supreme Court confirmed that the statute of limitations for a tax period in which a tax loss arose or could have been utilized runs separately for each tax period. The Court also confirmed that incurring a tax loss does not affect the statute of limitations for the tax period of a prior tax loss. Also, the statute of limitations for any tax period cannot be more than 10 years from the last day for submission of the tax return, and cannot be further extended, not even for tax periods in which a tax loss arose or could have been utilized. Note that, if the tax authorities conduct a tax audit after the statute of limitations has expired, and the tax audit required to be discontinued.
