According to the provisions of Caishui [2009] No.59, if the enterprise reorganization meets the prescribed conditions, the enterprise income tax can be subject to special tax treatment provisions, and the losses of the merged enterprise can be made up by the merged enterprise. The limit of the losses that can be made up by the merged enterprise = the fair value of the merged enterprise × the interest rate of the longest-term national debt issued by the state at the end of the year when the merged business occurs.

At the same time, according to No.4 of State Taxation Administration of The People's Republic of China Announcement No.20 20 10/0, the above-mentioned limit of the losses of the merged enterprise that can be made up by the merged enterprise refers to the limit of the losses of the merged enterprise that can be made up by the merged enterprise every year within the remaining carry-over period stipulated in the Tax Law.