On 29 June 2018, Inland Revenue (Amendment) (No. 5) Ordinance 2018 was gazetted. The Ordinance enables Hong Kong to expand the scope of profits tax deductions for capital expenditure incurred by enterprises for the purchase of intellectual property (IP) rights from five types to eight with effect from the year of tax assessment 2018/19.
With the expansion in scope of tax deductions provided therein, the eight types of IP rights eligible for profits tax deductions are:
- registered designs;
- registered trademarks;
- rights in layout design (topography) of integrated circuits;
- rights in plant varieties; and
- rights in performances.
The Ordinance also expands the scope of tax deductions originally provided for registration expenses related to trademarks, designs and patents to include plant variety rights.