Many companies have brands, patents, trademarks that earn them income either through direct exploitations or leasing out. These are either built internally or bought. Since they bring in income, which is taxed, let us look at their tax consequences.
The Income Tax Act allows for expenses incurred to develop or buy a trademark, patent, or secret to be deducted from a taxpayers’ taxable income. Such funds as expended are not deductible in full during the tax year they are incurred but the act allows under section 17(i) that they are spread over the number of years in which the invention, patent, design, trademark, copyright, other property or knowledge will be used.
If the patent is to be used for more than 25 years, then the cost is to be spread over 25 years and not beyond and if the patent or trademarks costs N$200 and less, it should be written off in the tax year the expenses were incurred.
– Update by Lazarus Amukeshe, Hdip Tax
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