Companies in Singapore can claim writing-down allowances on capital expenditure incurred in acquiring Intellectual Property Rights for use in their trade or business.
"Capital expenditure" excludes legal fees, registration fees, stamp duty and other costs related to the acquisition of the IPRs.
For the purpose of claiming writing-down allowances, IPRs are:
- Patents
- Copyrights
- Trademarks
- Registered designs
- Geographical indications
- Lay-out designs of integrated circuit
- Trade secrets or information with commercial value
- Plant varieties
Calculating the Writing-Down Allowances
There are varying useful lives of IPRs. To maintain a simple and certain tax regime, taxpayers are allowed the flexibility to choose their writing-down period.
A company is allowed from YA 2017 to make an irrevocable election to claim the writing-down allowances over a 5-year, 10-year or 15-year period. This is on a straight-line basis beginning from the YA of the basis period in which the capital expenditure is incurred in acquiring the IPR.
The amount qualifying for WDA is the capital expenditure incurred on acquiring qualifying IPRs, where it does not exceed the price at which the IPRs could have been acquired in the open market on the acquisition date.
Otherwise, the open market price of the qualifying IPRs may be used as the amount qualifying for WDA.
Claiming Writing-Down Allowances
A company claiming writing-down allowances is required to submit two documents together with Form C or Form C-S:
- Declaration Form for confirming that the ownership requirements of the acquired IPRs have been met and for IPRs acquired after YA 2017, to make an irrevocable election to claim the writing-down allowances at the time of lodgment of the income tax return in the first YA of writing-down allowances claim.
- Third-party independent valuation report on the value of the IPRs acquired if the capital expenditure incurred for acquiring the IPRs is >0.5 million for a related party transaction or if the capital expenditure incurred in acquiring the IPRs is >2 million for an unrelated party transaction.
Fidinam Can Help
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