19 May 2014

On 16 May 2014, the Inland Revenue Authority of Singapore (“IRAS”) issued the e-Tax Guide “Pharmaceutical Manufacturing Industry: Tax Treatment of Research & Development and Intellectual Property-Related Expenditures (Second Edition)”.

The e-Tax guide provides guidance on tax treatments for the following items common to pharmaceutical manufacturing companies in:

(a) Deduction of research and development(“R&D”) expenditure under sec 14D and sec 14DA of the Income Tax Act (“the Act”);

(b) Writing down allowances under sec 19B of the Act;

(c) Provision of R&D services;

(d) Deduction of royalty payments and withholding tax implications.

The new edition reflects the changes to R&D since the first edition of the e-Tax Guide was published on 22 August 2011. The major changes are:

• The extension of the R&D scheme from year of assessment (“YA”) 2015 to YA 2025;
• The expansion of sec 14D and sec 14DA to include payments made under R&D cost-sharing agreements with effect from YA 2012; and
• The removal of writing down allowances claim under sec 19C for approved R&D cost sharing agreements.

For the full details, please refer the e-Tax Guide on the IRAS website.

Source: Inland Revenue Authority of Singapore