Income Tax (Deductions) (Amendment) Rules, 2024

L.N. 229 of 2024

INCOME TAX ACT

(CAP. 123)

Income Tax (Deductions) (Amendment) Rules, 2024

IN EXERCISE of the powers conferred by articles 14(2) and 96

of the Income Tax Act, the Minister responsible for finance has made

the following rules:-

(1) The title of these rules is the Income Tax

(Deductions) (Amendment) Rules, 2024, and these rules shall be read

and construed as one with the Income Tax (Deductions) Rules,

hereinafter referred to as the "principal rules".

(2) The provisions of rule 6 of these rules shall apply with

effect from the year of assessment 2024.

In the definition "FSS Rules" of rule 2 of the principal

rules, the words "in replacement thereof." shall be substituted by the

words "in replacement thereof;" and immediately thereafter there shall

be added the following new definition

" "qualifying income" means the income produced through

the use or employment of the intellectual property or intellectual

property rights chargeable to tax in accordance with the

provisions of the Income Tax Acts before claiming the

deductions contemplated in rule 6(1)(b) or (2), as may be

applicable, and article 14(1)(o) of the Act.".

Immediately after rule 5 of the principal rules there shall be

added the following new rule

(1) Where any person claims a deduction

in accordance with the second proviso to article

14(1)(m) of the Act in respect of expenditure of a

capital nature on intellectual property or any

intellectual property rights (hereinafter referred to as

"expenditure"), the amount deductible in respect of

any year of assessment shall be computed as follows

(a) there shall be deducted that part of

the said expenditure which would otherwise

have been deductible by reference to the

minimum period allowed in accordance with the

first proviso to article 14(1)(m) of the Act; and

(b) there shall also be deducted that part

of the said expenditure remaining after

computing the deduction in accordance with

paragraph (a)

Provided that where the deduction or a part

thereof allowable in accordance with paragraph (b)

cannot for any year be given effect to in full because

there is no or insufficient qualifying income in that

year of assessment, the expenditure provided for in

said paragraph (b) shall not be available for deduction

against any other income for the said year, or available

for surrender in accordance with articles 16 to 22 of

the Act, but shall be carried forward for deduction and

be added to the deduction due for the following year

and be deemed to be part of that deduction, or if there

is no such deduction for that year, be deemed to be the

deduction for that year and so on for subsequent years

Provided further that, subject to the

provisions of the third proviso to article 14(1)(m) of

the Act, the aggregate of the deductions made in

accordance with paragraphs (a) and (b) shall not in any

case exceed the amount of the said expenditure.

(2) With respect to the year of assessment

2024, a claim for deduction in accordance with the

second proviso to article 14(1)(m) of the Act may also

be made with respect to any expenditure brought

forward during the said year which, due to the

provisions of the first proviso to article 14(1)(m) of the

Act, had not been so deducted in the years of

assessment preceding the year of assessment 2024, and

in such case, the amount deductible in respect of the

year of assessment 2024 and any subsequent year of

assessment shall be computed as follows

(a) there shall be deducted that part of

the said expenditure which would otherwise

have been deductible by reference to the period

chosen in preceding years of assessment and

allowed in accordance with the first proviso to

article 14(1)(m) of the Act; and

(b) there shall also be deducted that part

of the said expenditure remaining after

computing the deduction in accordance with

paragraph (a)

Provided that where the deduction or part

thereof allowable in accordance with paragraph (b)

cannot for any year be given effect to in full because

there is no or insufficient qualifying income in that

year of assessment, the expenditure under this part

shall not be available for deduction against any other

income for the said year, or available for surrender in

accordance with articles 16 to 22 of the Act, but shall

be carried forward for deduction and added to the

deduction due for the following year and shall be

deemed to be part of that deduction, or if there is no

such deduction for that year, be deemed to be the

deduction for that year and so on for subsequent years

Provided further that, subject to the

provisions of the third proviso to article 14(1)(m) of

the Act, the aggregate of the deductions made in

accordance with paragraphs (a) and (b) in conjunction

with any other deductions made in the years of

assessment preceding the year of assessment 2024

shall not in any case exceed the amount of the said

expenditure.

(3) For the avoidance of doubt, nothing in sub-

rules (1) and (2) shall be construed as allowing any

person to deduct or carry forward the expenditure in

circumstances where the deduction of such would not

have otherwise constituted an allowable loss in

accordance with article 14(1)(g) of the Act.".

€0.27