‘Benefits and encouragement from government needed’
“But without benefits and encouragment from the government, it will be very difficult for these existing hotels to continue investing. I’ve heard that the authorities are no longer approving incentives for refurbishment of hotels, or at least they have cut down the incentives for refurbishment of hotels, quite significantly,” he said.
As for the capital allowance for Information and Communication Technology ( ICT) Equipment and Software, particularly on the capital allownace at initial and annual allowance rate of 20 per cent to be given to cost of development of customised software, Tai commented that this is an area of concern.
“For a lot of the groups, their signicant investments in so far as ICT goes, in the Inland Revenue Board’s ( IRB) public rulings, the IRB did say that cost of development of software, customised software, is not a qualifying capital expenditure,” he said.
He noted that a lot of groups may have taken certain positions, in so far as software development costs are concerened. Certain groups may have not agreed with IRB’s public ruling, still thinking it qualifies as capital expenditure, and thus still claiming capital allowances for software development costs.
With a change in the law that suggests that costs of development of customised software is claimable from 2018, Tai said that, “We have a situation whereby, for groups that have been claiming capital allowances on the cost of developmentt of software, this now becomes an issue. There is this change of law now which suggests IRB’s position in the past is correct.”
Other speakers at the seminar were executive director of Transfer Pricing, Ivan Goh who shared about Base Erosion and Profit Shifting ( BEPS) and Transfer Pricing Updates and executive director of Indirect Tax Dany Oon who spoke on goods and services tax (GST) updates.