Budget 2016: Automatic double deduction for R&D projects

COMPANIES that carry out R&D projects are entitled to claim a double tax deduction on its R&D expenditure.

This measure is under Section 34A of the Income Tax Act 1967.

Companies must obtain an approval for the R&D project from the Inland Revenue Board (IRB) to qualify for this double deduction.

The move is to promote R&D activities among companies with paid-up capital not exceeding RM2.5mil.

The companies will be allowed to claim a double deduction automatically for R&D project expenditures up to RM50,000 for each year of assessment.

This is effective from the year of assessment 2016 until year of assessment 2018.