The Patent Box Deduction Rules, 2019 establishes a fiscal regime for income arising from patents, similar intellectual property (IP) Rights and copyrighted software. The rules additionally provide that small companies may utilise the patent box rules on income from any intellectual property based on an invention that could be patented. A tax payer qualifying for the Patent Box deduction will be entitled to deduct a percentage of its income from taxable income. This deduction will be adjusted depending on the percentage resulting from dividing the qualifying IP expenditure by the total expenditure related to the particular IP.
A tax payer wishing to benefit from the provisions of the Patent Box must request the determination of the Corporation. The request must be made on the appropriate application form and must include documentation confirming the research activity carried out by the applicant and the qualifying IP expenditure being claimed.