Double Deduction Incentive On Research Expenditure
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The right to appeal for rejected application due to inability to submit applications six months before the financial year end of the business as required under Paragraph 15.2 of Inland Revenue Board (IRB), Public Ruling 5/2004 on Double Deduction Incentive On research Expenditure.
Reply
The right to appeal within 30 days from the date of rejection letter as specified in the Public Ruling No. 5/2004 is line with subsection 99(1) of the Income tax Act 1967 where a tax payer may appeal on assessment made to him within 30 days from the date of the notice of assessment. Since the appeal has been submitted to IRB on 12 August 2009 (within 30 days from the date of the rejection letter), it will be reconsidered in the next committee meeting.
Please be informed that every R&D project submitted for approval is evaluated based on the activity, the extent of the project and its connectivity to the existing business of the applicant. A project may vary from another in terms of raw material used, technique and procedure even though the final product could have similar characteristic and function. To ensure a project fulfills the definition of R &D as provided under the Promotions of Investments Act 1986, the project has to be examined thoroughly and later be evaluated by senior tax officers. This is important in order to determine only R&D project that fulfills the definition qualifies for the double deduction.
