§ 43X — Concessionary rate of tax for intellectual property income

43X.—(1) Despite section 43 and subject to this section, the concessionary rate of tax under subsection (5) applies for each year of assessment upon a percentage determined in accordance with regulations of qualifying intellectual property income of an approved company, that is derived —(a)

from a qualifying IPR elected by the approved company for that year of assessment under subsections (7) and (8); and

(b)

in so much of the basis period for that year of assessment as falls within the tax relief period applicable to the approved company.[45/2018]

(2) The Minister or an authorised body may approve a company as an approved company (subject to such terms and conditions as the Minister or authorised body may specify), but not after 31 December 2028.[45/2018]

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

[Act 41 of 2020 wef 12/04/2024]

(3) The Minister or authorised body may —(a)

specify an initial tax relief period for an approved company that does not exceed 10 years;

(b)

specify a commencement date for the initial tax relief period that is not earlier than 1 July 2018; and

(c)

extend the tax relief period for a further period or periods, not exceeding 10 years for each period, as the Minister or authorised body may determine.[45/2018]

[Act 41 of 2020 wef 12/04/2024]

(4) Where the commencement date for the initial tax relief period is a date before the company becomes an approved company, then for the purposes of subsection (1), the company is treated as an approved company beginning on the commencement date.[45/2018]

(5) For the purpose of subsection (1), the concessionary rate of tax for an approved company is a rate determined in accordance with the formula A + B, where —(a)

if the company is approved before 17 February 2024 — A is a base rate of 5% or 10%, as specified by the Minister or person appointed by the Minister to the approved company;[Act 35 of 2024 wef 01/01/2024]

[Act 25 of 2025 wef 01/01/2024]

(b)

if the company is approved on or after 17 February 2024 — A is a base rate of 5%, 10% or 15%, as specified by the Minister or authorised body to the approved company;[Act 35 of 2024 wef 01/01/2024]

(c)

if subsection (6A) applies — A is the substituted base rate mentioned in that subsection but only for income derived from (and including) the date specified by the Minister or authorised body to the approved company for the application of that rate, which may be a date earlier than the notice mentioned in that subsection but not earlier than 1 January 2024; and[Act 35 of 2024 wef 01/01/2024]

(d)

B is the sum of every rate increase specified by the Minister or authorised body to the approved company in accordance with subsection (6).[45/2018; 41/2020]

[Act 35 of 2024 wef 01/01/2024]

(6) For the purposes of subsection (5)(d) —(a)

if A in subsection (5)(a), (b) or (c) is 5% or 10%, the Minister or authorised body must specify to an approved company, for the 3rd, 4th, 5th and 7th 5‑year period of its tax relief period, a rate increase of at least 0.5% that applies to the years of assessment of all the basis periods within each of those 5‑year periods; and

(b)

if A in subsection (5)(b) or (c) is 15%, the Minister or authorised body must specify to an approved company, for the 5th and 7th 5‑year period of its tax relief period, a rate increase of at least 0.5% that applies to the years of assessment of all the basis periods within each of those 5‑year periods.[Act 35 of 2024 wef 01/01/2024]

(6A) The Minister or an authorised body may, on or after 17 February 2024, on the Minister’s or authorised body’s own initiative or on the application of the approved company, by notice to the company substitute the base rate applicable to the approved company under subsection (5)(a) or (b) with 5%, 10% or 15% (as the case may be) for the remaining part of the period in subsection (3).[Act 35 of 2024 wef 01/01/2024]

(7) Subject to subsection (8), an approved company must elect a qualifying IPR to which subsection (1) is to apply for any year of assessment —(a)

in the form and manner determined by the Comptroller; and

(b)

at the time the approved company lodges its return of income for that year of assessment, or by such later time as the Comptroller may allow in any particular case.[45/2018]

(8) An election of any qualifying IPR made under subsection (7) for a year of assessment is irrevocable, and the approved company is treated as making an election for the same qualifying IPR for each subsequent year of assessment.[45/2018]

(9) To avoid doubt, subsections (7) and (8) do not prevent an approved company from electing for any year of assessment, any qualifying IPR not already elected or treated as elected under those subsections.[45/2018]

(10) The approved company must, in such circumstances as the Comptroller may determine and in such form and manner as the Comptroller may require, provide the Comptroller with such information and documents as the Comptroller may require for the purposes of determining the applicability of subsection (1) in a particular case.[45/2018]

(11) The Minister may make regulations to provide for any of the following:(a)

the determination of the percentage of qualifying intellectual property income of an approved company for the purposes of subsection (1);

(b)

the intellectual property income that is qualifying intellectual property income for this section;

(c)

the deduction (otherwise than in accordance with this Act), from the qualifying intellectual property income of an approved company, of —(i)

allowances attributable to the income; and

(ii)

expenses, losses and donations allowable under this Act,

including deduction of these allowances, expenses, losses and donations in such manner and to such extent as the Comptroller may determine;

(d)

the circumstances under which a prescribed amount of qualifying intellectual property income that has been assessed to tax at the concessionary rate in subsection (1) may be deemed as income chargeable to tax at the rate of tax in section 43(1)(a) for a specified year of assessment;

(da)

the circumstances under which a prescribed amount of expenses, allowances or donations deducted from qualifying intellectual property income of an approved company may be deemed as a loss;

(db)

the treatment of the loss mentioned in paragraph (da), including disregarding any part of it, or making available any part of it for —(i)

deduction against any income subject to tax at the rate specified in section 43(1)(a) for a specified year of assessment in accordance with this Act;

(ii)

deduction against any income for any preceding or subsequent year of assessment in accordance with this Act; and

(iii)

transfer under section 37B;

(dc)

the application of the provisions of this Act for the purpose of the deductions and transfer in paragraph (db) with such modifications as may be prescribed;

(e)

the records to be kept by an approved company;

(f)

generally to give effect to or carry out the purposes of this section.[45/2018; 27/2021]

(12) To avoid doubt, any regulations made under subsection (11)(e) do not affect the generality of section 67.[45/2018]

(13) In this section —“qualifying intellectual property income” means any intellectual property income prescribed by the Minister in regulations made under this section;

“qualifying intellectual property right” or “qualifying IPR” means any intellectual property right prescribed by the Minister in regulations made under this section.

(14) The reference to an authorised body in subsection (5)(b) is, in a case where the base rate in that provision is specified to an approved company during the period from 17 February 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

(15) A reference in subsections (5)(c) and (6A) to an authorised body is, in a case where the notice to substitute the base rate applicable to an approved company is given to the company during the period from 17 February 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

(16) A reference in subsections (5)(d) and (6)(a) to an authorised body is, in a case where the rate increase under subsection (6)(a) is specified to an approved company during the period from 1 January 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

(17) A reference in subsections (5)(d) and (6)(b) to an authorised body is, in a case where the rate increase under subsection (6)(b) is specified to an approved company during the period from 17 February 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

[43ZI

[45/2018]

—(1) Despite section 43 and subject to this section, the concessionary rate of tax under subsection (5) applies for each year of assessment upon a percentage determined in accordance with regulations of qualifying intellectual property income of an approved company, that is derived —(a)

from a qualifying IPR elected by the approved company for that year of assessment under subsections (7) and (8); and

(b)

in so much of the basis period for that year of assessment as falls within the tax relief period applicable to the approved company.[45/2018]

(2) The Minister or an authorised body may approve a company as an approved company (subject to such terms and conditions as the Minister or authorised body may specify), but not after 31 December 2028.[45/2018]

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

[Act 41 of 2020 wef 12/04/2024]

(3) The Minister or authorised body may —(a)

specify an initial tax relief period for an approved company that does not exceed 10 years;

(b)

specify a commencement date for the initial tax relief period that is not earlier than 1 July 2018; and

(c)

extend the tax relief period for a further period or periods, not exceeding 10 years for each period, as the Minister or authorised body may determine.[45/2018]

[Act 41 of 2020 wef 12/04/2024]

(4) Where the commencement date for the initial tax relief period is a date before the company becomes an approved company, then for the purposes of subsection (1), the company is treated as an approved company beginning on the commencement date.[45/2018]

(5) For the purpose of subsection (1), the concessionary rate of tax for an approved company is a rate determined in accordance with the formula A + B, where —(a)

if the company is approved before 17 February 2024 — A is a base rate of 5% or 10%, as specified by the Minister or person appointed by the Minister to the approved company;[Act 35 of 2024 wef 01/01/2024]

[Act 25 of 2025 wef 01/01/2024]

(b)

if the company is approved on or after 17 February 2024 — A is a base rate of 5%, 10% or 15%, as specified by the Minister or authorised body to the approved company;[Act 35 of 2024 wef 01/01/2024]

(c)

if subsection (6A) applies — A is the substituted base rate mentioned in that subsection but only for income derived from (and including) the date specified by the Minister or authorised body to the approved company for the application of that rate, which may be a date earlier than the notice mentioned in that subsection but not earlier than 1 January 2024; and[Act 35 of 2024 wef 01/01/2024]

(d)

B is the sum of every rate increase specified by the Minister or authorised body to the approved company in accordance with subsection (6).[45/2018; 41/2020]

[Act 35 of 2024 wef 01/01/2024]

(6) For the purposes of subsection (5)(d) —(a)

if A in subsection (5)(a), (b) or (c) is 5% or 10%, the Minister or authorised body must specify to an approved company, for the 3rd, 4th, 5th and 7th 5‑year period of its tax relief period, a rate increase of at least 0.5% that applies to the years of assessment of all the basis periods within each of those 5‑year periods; and

(b)

if A in subsection (5)(b) or (c) is 15%, the Minister or authorised body must specify to an approved company, for the 5th and 7th 5‑year period of its tax relief period, a rate increase of at least 0.5% that applies to the years of assessment of all the basis periods within each of those 5‑year periods.[Act 35 of 2024 wef 01/01/2024]

(6A) The Minister or an authorised body may, on or after 17 February 2024, on the Minister’s or authorised body’s own initiative or on the application of the approved company, by notice to the company substitute the base rate applicable to the approved company under subsection (5)(a) or (b) with 5%, 10% or 15% (as the case may be) for the remaining part of the period in subsection (3).[Act 35 of 2024 wef 01/01/2024]

(7) Subject to subsection (8), an approved company must elect a qualifying IPR to which subsection (1) is to apply for any year of assessment —(a)

in the form and manner determined by the Comptroller; and

(b)

at the time the approved company lodges its return of income for that year of assessment, or by such later time as the Comptroller may allow in any particular case.[45/2018]

(8) An election of any qualifying IPR made under subsection (7) for a year of assessment is irrevocable, and the approved company is treated as making an election for the same qualifying IPR for each subsequent year of assessment.[45/2018]

(9) To avoid doubt, subsections (7) and (8) do not prevent an approved company from electing for any year of assessment, any qualifying IPR not already elected or treated as elected under those subsections.[45/2018]

(10) The approved company must, in such circumstances as the Comptroller may determine and in such form and manner as the Comptroller may require, provide the Comptroller with such information and documents as the Comptroller may require for the purposes of determining the applicability of subsection (1) in a particular case.[45/2018]

(11) The Minister may make regulations to provide for any of the following:(a)

the determination of the percentage of qualifying intellectual property income of an approved company for the purposes of subsection (1);

(b)

the intellectual property income that is qualifying intellectual property income for this section;

(c)

the deduction (otherwise than in accordance with this Act), from the qualifying intellectual property income of an approved company, of —(i)

allowances attributable to the income; and

(ii)

expenses, losses and donations allowable under this Act,

including deduction of these allowances, expenses, losses and donations in such manner and to such extent as the Comptroller may determine;

(d)

the circumstances under which a prescribed amount of qualifying intellectual property income that has been assessed to tax at the concessionary rate in subsection (1) may be deemed as income chargeable to tax at the rate of tax in section 43(1)(a) for a specified year of assessment;

(da)

the circumstances under which a prescribed amount of expenses, allowances or donations deducted from qualifying intellectual property income of an approved company may be deemed as a loss;

(db)

the treatment of the loss mentioned in paragraph (da), including disregarding any part of it, or making available any part of it for —(i)

deduction against any income subject to tax at the rate specified in section 43(1)(a) for a specified year of assessment in accordance with this Act;

(ii)

deduction against any income for any preceding or subsequent year of assessment in accordance with this Act; and

(iii)

transfer under section 37B;

(dc)

the application of the provisions of this Act for the purpose of the deductions and transfer in paragraph (db) with such modifications as may be prescribed;

(e)

the records to be kept by an approved company;

(f)

generally to give effect to or carry out the purposes of this section.[45/2018; 27/2021]

(12) To avoid doubt, any regulations made under subsection (11)(e) do not affect the generality of section 67.[45/2018]

(13) In this section —“qualifying intellectual property income” means any intellectual property income prescribed by the Minister in regulations made under this section;

“qualifying intellectual property right” or “qualifying IPR” means any intellectual property right prescribed by the Minister in regulations made under this section.

(14) The reference to an authorised body in subsection (5)(b) is, in a case where the base rate in that provision is specified to an approved company during the period from 17 February 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

(15) A reference in subsections (5)(c) and (6A) to an authorised body is, in a case where the notice to substitute the base rate applicable to an approved company is given to the company during the period from 17 February 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

(16) A reference in subsections (5)(d) and (6)(a) to an authorised body is, in a case where the rate increase under subsection (6)(a) is specified to an approved company during the period from 1 January 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

(17) A reference in subsections (5)(d) and (6)(b) to an authorised body is, in a case where the rate increase under subsection (6)(b) is specified to an approved company during the period from 17 February 2024 to 11 April 2024 (both dates inclusive), a reference to a person appointed by the Minister.[Act 25 of 2025 wef 01/01/2024]

[43ZI

[45/2018]