Monday, April 24, 2012. 11:03 The tax act on loss carried forward only applies to those companies who file blue returns and fail to file blue returns due to natural disaster occurred in the year. According to this tax act, companies who generate an earning can claim for a deduction for the loss in the past against its taxable income, through which reduce the tax burden in the year it has taxable income. However, as there is a reduction of Corporate tax rate (please refer to the previous post “Draft of Tax reform for year 2012 (1 – Reduced tax rate)”) under the tax reform of year 2012, in order to secure financial resource, Japan’s Government proposed a new tax act on Loss carried forward. Under this new tax act, the carried-forward loss can only be deducted against 80% of the taxable income while the carried forward period is extended from seven years to nine years (see table 1 below). Compare Current tax act and the New Tax act on Loss carried forward: Applicable companies: Companies other than small to medium sized company. Applicable period: Companies whose fiscal year starts on or after April 1, 2012. Applicable loss: The loss incrred on or after April 1, 2008.