The OECD published a study on the tax impact of loss relief based on detailed country-level information across a total of 34 OECD and non-OECD countries.

The study found that 18 countries allow the unlimited carry-forward of loss relief for tax purposes and most countries do not index tax losses to inflation. Only 9 countries provide carry-backs while 8 countries limit the amount of tax losses which can be offset in any given year.

The study titled “Measuring effects on tax symmetry and automatic stabilisation” recommends the unrestricted carry forward or carry backward of tax losses along with indexation of tax losses to remove tax-induced distortions towards less risky projects. The study states that an unrestricted tax loss policy would support an efficient allocation of investment funds and increase the resilience of the economy during protracted downturns but noted that the unrestricted carryback of losses may encourage fraudulent behaviour.