Taxation for Companies & Partnerships

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What Tax Incentives do Businesses get?

The Tax Laws (Amendment) Act which was assented to on 25th April 2020 amends various tax legislations.

The Second Schedule to the Income Tax Act which dealt with capital allowances has been repealed and replaced with new second Schedule titled ‘Investment Allowance” whose key highlights are as follows:-

  1. The rate of capital allowances has been rationalized to a maximum of 100%
  2. Claims to be made on  reducing balance basis
  3. Decelerated claims: - 50% in the first year of investment and the residual to be claimed at different rates (10% or 25%) on a reducing balance.

The rates of deduction are as follows:-

Capital Expenditure Incurred on: Rate of Investment Allowance

(a) Buildings 

 
i)  Hotel Buildings  50% in the first year of use
ii) Buildings used for manufacture  50% in the first year of use
iii)Hospital buildings  50% in the first year of use
iv)Petroleum or gas storage facilities  50% in the first year of use
v) Residual value to item (a)(i) to a(iv)  25% per year, on reducing balance
vi)Educational buildings including student hostels  10% per year, on reducing balance
vii) Commercial building  10% per year, on reducing balance
 (b)Machinery 
 i) Machinery used for manufacture  50% in the first year of use
ii) Hospital equipment   50% in the first year of use
iii) Ships or aircrafts   50% in the first year of use
iv)Residual value items (b)(i) to (b)(iii)  25% in the first year of use
v) Motor Vehicle and heavy earth moving equipment  25% in the first year of use
vi) Computer and peripheral computer hardware and software calculators, copiers and duplicating machines  25% in the first year of use
vii)Furniture and fittings  10% per year, reducing balance
viii)Telecommunications Equipment   10% per year, reducing balance
ix) Filming equipment by a local film producer licensed by the Cabinet Secretary responsible for filming  25% per year on reducing balance
x) Machinery used to undertake operations under a prospecting right  50% in the first year of use and 25% per year, on  reducing balance
xi)Machinery used to undertake exploration operations under a mining right  50% in the first year of use and 25% per year on reducing balance
xii) Other machinery   10% per year, reducing balance
 (c) Purchase or an acquisition of an indefeasible right to use fibre optic cable by a telecommunication operator  10% per year, on reducing balance
 (d) Farmworks  50% in the first year of use and 25% per year, on reducing balance