§ 14U — Enhanced deduction for expenditure on licensing intellectual property rights

14U.—(1) Subject to this section, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for any year of assessment between the years of assessment 2019 and 2028 (both years inclusive), there is to be allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under section 14 or 14C (as the case may be), a deduction of the amount of the expenditure incurred during the basis period for the purposes of those trades and businesses on the licensing from another person of any qualifying intellectual property rights, up to $100,000.[45/2018]

[Act 30 of 2023 wef 30/10/2023]

(1A) For the purpose of ascertaining the income of a person —(a)

who is a qualifying person for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive); and

(b)

who carries on a trade or business during the basis period for that year of assessment,

there is allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under section 14 or 14C (as the case may be) and in lieu of subsection (1), a deduction for expenditure incurred during that basis period for the purposes of those trades and businesses on the licensing from another person of any qualifying intellectual property rights, computed in accordance with the formula

where A is the lower of the following:

(a)

the expenditure incurred during that basis period;

(b)

$400,000.[Act 30 of 2023 wef 30/10/2023]

(1B) Despite subsection (1A) and section 19B, where the qualifying person has, during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), incurred both —(a)

expenditure on the licensing from another person of any qualifying intellectual property rights; and

(b)

expenditure on the acquisition of any intellectual property rights,

the total of the expenditure which may be given a deduction under subsection (1A) and the expenditure which may be given an allowance under section 19B(1AD), must not exceed $400,000 for that year of assessment.

[Act 30 of 2023 wef 30/10/2023]

(1C) In this section, a person is a qualifying person for a year of assessment if —(a)

where the person is a company that is not part of a group — the person derives less than $500 million in gross revenue from all of its trades and businesses in the basis period for that year of assessment;

(b)

where the person is a company that is part of a group — all the entities in the group derive a total of less than $500 million in gross revenue from all of the entities’ trades and businesses in that basis period;

(c)

where the person is an individual proprietor — the person derives less than $500 million in gross revenue in that basis period from all of the person’s trades and businesses that are carried on through one or more individual proprietorships;

(d)

where the person is a partner of a partnership, and either the partnership is under the control of a single partner who is an individual or no single partner has control over the partnership — the partnership derives less than $500 million in gross revenue from all of the partnership’s trades and businesses in that basis period; or

(e)

where the person is a partner of a partnership, and the partnership is under the control of a single partner that is a company — the partnership, the company and all other entities in the group of which the partnership and the company are parts derive a total of less than $500 million in gross revenue from all of their trades and businesses in that basis period.[Act 30 of 2023 wef 30/10/2023]

(1D) In subsection (1C)(d) and (e), whether or not a partnership is under the control of a partner is determined in accordance with FRS 110.[Act 30 of 2023 wef 30/10/2023]

(1E) In subsections (1C) and (1D) —“FRS 110” means the financial reporting standard known as Financial Reporting Standard 110 (Consolidated Financial Statements) that is treated as made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time;

“group” means a group of entities (whether incorporated or registered in Singapore or elsewhere) comprising a parent and its subsidiaries within the meaning of FRS 110.[Act 30 of 2023 wef 30/10/2023]

(2) For the purposes of subsections (1) and (1A), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the years of assessment 2019 and 2028 (both years inclusive), incurred expenditure on the licensing from another person of any qualifying intellectual property rights in respect of such firms for the purposes of the individual’s trade or business, the deductions that may be allowed to the individual for that expenditure in respect of all of the individual’s trades and businesses must not exceed the maximum amount mentioned in subsection (1), or the amount computed in accordance with subsection (1A) as qualified by subsection (1B), as the case may be.[45/2018]

[Act 30 of 2023 wef 30/10/2023]

(3) For the purposes of subsections (1) and (1A), where a partnership carrying on a trade or business has, during the basis period for any year of assessment between the years of assessment 2019 and 2028 (both years inclusive), incurred expenditure on the licensing from another person of any qualifying intellectual property rights for the purposes of the partnership’s trade or business, the deductions that may be allowed to all the partners of the partnership for that expenditure in respect of all of the trades and businesses of the partnership must not exceed the maximum amount mentioned in subsection (1), or the amount computed in accordance with subsection (1A) as qualified by subsection (1B), as the case may be.[45/2018]

[Act 30 of 2023 wef 30/10/2023]

(4) No deduction may be allowed to a person under this section in respect of —(a)

any expenditure that is not allowed as a deduction under section 14 or 14C, as the case may be;

(b)

any expenditure incurred by that person on licensing from its related party, of any qualifying intellectual property rights, where such rights were acquired or developed (in whole or in part) by the related party; or

(c)

any qualifying intellectual property rights for which a writing‑down allowance has been previously made to that person under section 19B.[45/2018]

(5) The Minister may by order exempt a person from subsection (4)(b) in respect of such transaction as may be specified in the order.[45/2018]

(6) In this section, “qualifying intellectual property rights” has the meaning given by section 14T(8).[45/2018]

[Act 33 of 2022 wef 04/11/2022]

(7) In this section, a reference to expenditure incurred on the licensing from another person of qualifying intellectual property rights excludes any such expenditure to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board.[45/2018]

(8) In this section —“expenditure incurred on the licensing from another person of qualifying intellectual property rights” means the licence fees but excludes —(a)

expenditure for the transfer of ownership of any of those rights; and

(b)

legal fees and other costs related to the licensing of such rights;

“individual proprietor” has the meaning given by section 2(1) of the Business Names Registration Act 2014.[Act 30 of 2023 wef 30/10/2023]

[14WA

[45/2018]

—(1) Subject to this section, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for any year of assessment between the years of assessment 2019 and 2028 (both years inclusive), there is to be allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under section 14 or 14C (as the case may be), a deduction of the amount of the expenditure incurred during the basis period for the purposes of those trades and businesses on the licensing from another person of any qualifying intellectual property rights, up to $100,000.[45/2018]

[Act 30 of 2023 wef 30/10/2023]

(1A) For the purpose of ascertaining the income of a person —(a)

who is a qualifying person for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive); and

(b)

who carries on a trade or business during the basis period for that year of assessment,

there is allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under section 14 or 14C (as the case may be) and in lieu of subsection (1), a deduction for expenditure incurred during that basis period for the purposes of those trades and businesses on the licensing from another person of any qualifying intellectual property rights, computed in accordance with the formula

where A is the lower of the following:

(a)

the expenditure incurred during that basis period;

(b)

$400,000.[Act 30 of 2023 wef 30/10/2023]

(1B) Despite subsection (1A) and section 19B, where the qualifying person has, during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), incurred both —(a)

expenditure on the licensing from another person of any qualifying intellectual property rights; and

(b)

expenditure on the acquisition of any intellectual property rights,

the total of the expenditure which may be given a deduction under subsection (1A) and the expenditure which may be given an allowance under section 19B(1AD), must not exceed $400,000 for that year of assessment.

[Act 30 of 2023 wef 30/10/2023]

(1C) In this section, a person is a qualifying person for a year of assessment if —(a)

where the person is a company that is not part of a group — the person derives less than $500 million in gross revenue from all of its trades and businesses in the basis period for that year of assessment;

(b)

where the person is a company that is part of a group — all the entities in the group derive a total of less than $500 million in gross revenue from all of the entities’ trades and businesses in that basis period;

(c)

where the person is an individual proprietor — the person derives less than $500 million in gross revenue in that basis period from all of the person’s trades and businesses that are carried on through one or more individual proprietorships;

(d)

where the person is a partner of a partnership, and either the partnership is under the control of a single partner who is an individual or no single partner has control over the partnership — the partnership derives less than $500 million in gross revenue from all of the partnership’s trades and businesses in that basis period; or

(e)

where the person is a partner of a partnership, and the partnership is under the control of a single partner that is a company — the partnership, the company and all other entities in the group of which the partnership and the company are parts derive a total of less than $500 million in gross revenue from all of their trades and businesses in that basis period.[Act 30 of 2023 wef 30/10/2023]

(1D) In subsection (1C)(d) and (e), whether or not a partnership is under the control of a partner is determined in accordance with FRS 110.[Act 30 of 2023 wef 30/10/2023]

(1E) In subsections (1C) and (1D) —“FRS 110” means the financial reporting standard known as Financial Reporting Standard 110 (Consolidated Financial Statements) that is treated as made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time;

“group” means a group of entities (whether incorporated or registered in Singapore or elsewhere) comprising a parent and its subsidiaries within the meaning of FRS 110.[Act 30 of 2023 wef 30/10/2023]

(2) For the purposes of subsections (1) and (1A), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the years of assessment 2019 and 2028 (both years inclusive), incurred expenditure on the licensing from another person of any qualifying intellectual property rights in respect of such firms for the purposes of the individual’s trade or business, the deductions that may be allowed to the individual for that expenditure in respect of all of the individual’s trades and businesses must not exceed the maximum amount mentioned in subsection (1), or the amount computed in accordance with subsection (1A) as qualified by subsection (1B), as the case may be.[45/2018]

[Act 30 of 2023 wef 30/10/2023]

(3) For the purposes of subsections (1) and (1A), where a partnership carrying on a trade or business has, during the basis period for any year of assessment between the years of assessment 2019 and 2028 (both years inclusive), incurred expenditure on the licensing from another person of any qualifying intellectual property rights for the purposes of the partnership’s trade or business, the deductions that may be allowed to all the partners of the partnership for that expenditure in respect of all of the trades and businesses of the partnership must not exceed the maximum amount mentioned in subsection (1), or the amount computed in accordance with subsection (1A) as qualified by subsection (1B), as the case may be.[45/2018]

[Act 30 of 2023 wef 30/10/2023]

(4) No deduction may be allowed to a person under this section in respect of —(a)

any expenditure that is not allowed as a deduction under section 14 or 14C, as the case may be;

(b)

any expenditure incurred by that person on licensing from its related party, of any qualifying intellectual property rights, where such rights were acquired or developed (in whole or in part) by the related party; or

(c)

any qualifying intellectual property rights for which a writing‑down allowance has been previously made to that person under section 19B.[45/2018]

(5) The Minister may by order exempt a person from subsection (4)(b) in respect of such transaction as may be specified in the order.[45/2018]

(6) In this section, “qualifying intellectual property rights” has the meaning given by section 14T(8).[45/2018]

[Act 33 of 2022 wef 04/11/2022]

(7) In this section, a reference to expenditure incurred on the licensing from another person of qualifying intellectual property rights excludes any such expenditure to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board.[45/2018]

(8) In this section —“expenditure incurred on the licensing from another person of qualifying intellectual property rights” means the licence fees but excludes —(a)

expenditure for the transfer of ownership of any of those rights; and

(b)

legal fees and other costs related to the licensing of such rights;

“individual proprietor” has the meaning given by section 2(1) of the Business Names Registration Act 2014.[Act 30 of 2023 wef 30/10/2023]

[14WA

[45/2018]