Scope of tax deductions for capital expenditure incurred for purchase of intellectual property rights expanded
The Inland Revenue (Amendment) (No. 5) Ordinance 2018 (the Amendment Ordinance) was gazetted and came into operation on 29 June 2018 to expand the scope of profits tax deductions for capital expenditure incurred by enterprises for the purchase of intellectual property (IP) rights from five types to eight with effect from the year of tax assessment 2018/19.
he additional three types of IP rights involved are rights in layout design (topography) of integrated circuits, plant varieties and performances. The original five types of IP rights for which profits tax deductions have already been provided for the capital expenditure incurred for their purchase are patents, know-how, copyright, registered designs and registered trade marks.
The Amendment Bill also expands the scope of tax deductions originally provided for the registration expenses for trademarks, designs and patents, to cover plant variety rights as well.