Intellectual Property rights

As from 1 January 2012 the cost for the acquisition or development of the intangible assets (being of a capital nature) is amortised over a five year period commencing from the year of the expense.

This provision shall be applicable for expenditure incurred by a person carrying on a business for the acquisition or development of intangible assets, as defined in the Patent Law, the Intellectual Property Right Law and the Trademark Law. These laws cover the following types and categories of intangible assets:

1. trade marks
2. patents
3. intellectual property rights covering scientific work, literary work, musical work, artistic work, movies, database, recording, broadcast, publication.

In accordance with the changes, eighty percent (80%) of the profit arising from the use of the intangible assets (including compensation for improper use of such assets) as well as out of the profit of their sale is deemed as an expense in arriving at the taxable income. The 80% deduction applies on the profit after deducting all direct expenses, such as amortization of the assets, interest expenses to finance the acquisition or the development of the assets, as well as any other direct expenses.