Accounting depreciation is not recognized as a tax-deductible expense. For income tax purposes, the company will be given a tax allowance on qualifying expenditure incurred on plant, machinery or other fixed assets computed in accordance with rates provided by the taxation authorities.
There are various tax incentives available and these take the form of approved pioneer status, double deductions, accelerated capital allowances, investment allowances, and various other incentives for export, expansion, warehousing and servicing, international consultancy services, research and development, pioneer service, venture capital, principal hub incentives, etc. These incentives
may be accorded in the form of double deduction of qualifying expenditure incurred, exemption of tax, or reduced rate of tax on income.
Such incentives, introduced by the Government to stimulate the economy, assist in the development of certain areas of economy, encourage exports of manufactured goods and qualifying services, and promote regionalization, etc.
These incentives are administered under the Promotion of Investments Act 1986 and Income Tax Act 1967.