INCOME TAX (DEDUCTION FOR COST OF ACQUISITION OF PROPRIETARY
RIGHTS) RULES 2002 [P.U.(A) 63]
IN
exercise of the powers conferred by paragraph 154(1)(b) of the Income
Tax Act 1967 [Act 53], the Minister makes the following rules:
Citation
and commencement
1. (1) These rules may be cited as the Income Tax
(Deduction for Cost of Acquisition of Proprietary Rights) Rules 2002.
(2) These Rules shall have
effect from the year of assessment 2002.
Application
2. These Rules shall apply
in respect of the cost of acquisition of proprietary rights used for the
purposes of the business of a manufacturing company and which at least seventy
per centum of the issued share capital of the company is Malaysian owned.
Interpretation
3. For the purposes of
these Rules —
“proprietary
rights” means patents, industrial design or trademarks which are granted or
registered under the relevant written laws;
“cost
of acquisition of proprietary rights” means payment for the purchase of the
proprietary rights inclusive of consultancy fees, legal fees and stamp duties
incurred but does not include any payment of royalty as defined under section 2
of the Act.
Expenditure
on cost of acquisition of proprietary rights deemed incurred
4. For the purpose of a
deduction under rule 5 —
(a) the cost of
acquisition of proprietary rights shall be deemed to be incurred on the date
the cost becomes payable; and
(b) in relation to the
cost of acquisition of proprietary rights incurred prior to the commencement of
business, such cost shall be deemed to be incurred on the date of the
commencement of the business.
Deduction
5. (1) Subject to subparagraph (2), for the purposes
of ascertaining the adjusted income of a manufacturing company which has
incurred cost of acquisition of proprietary rights in the basis period for a
year of assessment, there shall be allowed a deduction of an amount equal to
one-fifth of the cost of acquisition of the proprietary rights for that year of
assessment and for each of the four following years of assessment.
(2) For the purposes of ascertaining the adjusted
income of the subsidiary company, where the proprietary rights are transferred
or purchased from the holding company which is the manufacturing company
referred to in subparagraph (1), there shall be allowed to that subsidiary
company a deduction of an amount equal to one-fifth of the original cost of
acquisition of the proprietary rights for each year of assessment, subject to
the amount of the cost of acquisition that is unallowed to the holding company.
(3) Where the proprietary
rights cease to be used in the basis period for a year of assessment no
deduction shall be made for that year of assessment.
Cost
of acquisition of proprietary rights incurred prior to the year of assessment
2002
6. Subject to subrules
5(2)and 5(3), where a manufacturing company has incurred cost of acquisition of
proprietary rights in the basis period for any year of assessment from the year
of assessment 1997 to the year of assessment 2001, a deduction of an amount
equal to one-tenth of the original cost of acquisition of the proprietary
rights shall be allowed for each of the years of assessment commencing from the
year of assessment the cost of acquisition of the proprietary rights was
incurred, and a deduction of an amount equal to one-fifth of the original cost
of acquisition of the proprietary rights shall be allowed for the year of
assessment 2002 and subsequent years of assessment,subject to the amount of the
cost of acquisition remaining unallowed to the company.
Revocation
7. Income Tax (Deduction
for Cost of Acquisition of Proprietary Rights) Rules 1999 [P.U. (A) 127/99]
published in the Gazette on 5 April 1999 is revoked.Notes Link
Made
24 January 2002.
[Perb.0.3865/G
(SJ6); LHDN.01/35/(S)/42/51/231-2; PN(PU2)80/XXXI]
By
order,
CHAN KONG CHOY
Deputy Minister of Finance
[To be laid before the
Dewan Rakyat pursuant to subsection 154(2) of the Income Tax Act 1967]
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