Clause 36

Despite section 43 and subject to this section, the concessionary rate of tax under subsection (5) applies for each year of assessment upon a percentage determined in accordance with regulations of qualifying intellectual property income of an approved company, that is derived —

from a qualifying IPR elected by the approved company for that year of assessment under subsections (7) and (8); and

in so much of the basis period for that year of assessment as falls within the tax relief period applicable to the approved company.(2) The Minister or a person appointed by the Minister may approve a company as an approved company (subject to such terms and conditions as the Minister or appointed person may specify), but not after 31 December 2023.(3) The Minister or the appointed person may —

specify an initial tax relief period for an approved company that does not exceed 10 years;

specify a commencement date for the initial tax relief period that is not earlier than 1 July 2018; and

extend the tax relief period for a further period or periods, not exceeding 10 years for each period, as the Minister or the appointed person may determine.(4) Where the commencement date for the initial tax relief period is a date before the company becomes an approved company, then for the purposes of subsection (1), the company is treated as an approved company beginning on the commencement date.(5) For the purpose of subsection (1), the concessionary rate of tax for an approved company is a rate determined in accordance with the formula A + B, where —

A is a base rate of 5% or 10% as the Minister may determine; and

B is the sum of every rate increase specified by the Minister or the appointed person to the approved company in accordance with subsection (6).(6) For the purposes of subsection (5)(b), the Minister or the appointed person must specify to an approved company, for every 5‑year period beginning with the third 5‑year period of its tax relief period and ending with the eighth 5‑year period of its tax relief period, a rate increase of at least 0.5% that applies to the years of assessment of all the basis periods within that 5‑year period.(7) Subject to subsection (8), an approved company must elect a qualifying IPR to which subsection (1) is to apply for any year of assessment —

in the form and manner determined by the Comptroller; and

at the time the approved company lodges its return of income for that year of assessment, or by such later time as the Comptroller may allow in any particular case.(8) An election of any qualifying IPR made under subsection (7) for a year of assessment is irrevocable, and the approved company is treated as making an election for the same qualifying IPR for each subsequent year of assessment.(9) To avoid doubt, subsections (7) and (8) do not prevent an approved company from electing for any year of assessment, any qualifying IPR not already elected or treated as elected under those subsections.(10) The approved company must, in such circumstances as the Comptroller may determine and in such form and manner as the Comptroller may require, provide the Comptroller with such information and documents as the Comptroller may require for the purposes of determining the applicability of subsection (1) in a particular case.(11) The Minister may make regulations to provide for any of the following:

the determination of the percentage of qualifying intellectual property income of an approved company for the purposes of subsection (1);

the intellectual property income that is qualifying intellectual property income for this section;

the deduction (otherwise than in accordance with this Act), from the qualifying intellectual property income of an approved company, of —

allowances attributable to the income; and

expenses, losses and donations allowable under this Act,including deduction of these allowances, expenses, losses and donations in such manner and to such extent as the Comptroller may determine;

the circumstances under which a prescribed amount of qualifying intellectual property income that has been assessed to tax at the concessionary rate in subsection (1) may be deemed as income chargeable to tax at the rate of tax in section 43(1)(a) for a specified year of assessment;

the records to be kept by an approved company;

generally to give effect to or carry out the purposes of this section.(12) To avoid doubt, any regulations made under subsection (11)(e) do not affect the generality of section 67.(13) In this section —“qualifying intellectual property income” means any intellectual property income prescribed by the Minister in regulations made under this section;“qualifying intellectual property right” or “qualifying IPR” means any intellectual property right prescribed by the Minister in regulations made under this section.”.