Deductions in Respect of Intellectual Property and Intellectual Property Rights
On the 28 December the Commissioner for Tax and Customs has announced an accelerated rate of depreciation when it comes to capital expenditure incurred on Intellectual Property or Intellectual Property rights which are used and employed in producing income.
With effect from the period covered by the year of assessment 2024, any capital expenditure incurred on Intellectual Property or Intellectual Property Rights may, at the option of the person incurring such expenditure, be deducted in full in terms of article 14(1)(m) of the Income Tax Act in the year that the said expenditure has been incurred or in the year in which the Intellectual Property or Intellectual Property Rights are first used or employed in producing the income. Such capital expenditure was previously deductible under article 14(1)(m) of the Income Tax Act over a number of years which is not less than a minimum period of three consecutive years.
The Commissioner clarified that any deductions that were yet unclaimed as at the year of assessment 2023, may be claimed in full in the year of assessment 2024. By way of example, intellectual property that was acquired in the year of assessment 2023 and a 33.33% deduction of the expense was claimed in that year of assessment, the person can claim the remaining 66.67% in the year of assessment 2024.
Should you require any further assistance or require any further information about the reduced rate of tax, do not hesitate to contact us so that we may assist you.
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Elaine Marie Debono Tax senior manager - Birkirkara
Ruth Farrugia Tax Director - Birkirkara
