In a move to enhance certainty for businesses claiming writing-down allowances on intellectual property rights (IPRs), the Inland Revenue Authority of Singapore (IRAS) has issued critical clarifications to its e-Tax Guide.
The update, released on 30 January 2026, addresses practical challenges in determining the qualifying amount for claims under Section 19B of the Income Tax Act 1947, with several key paragraphs now having the force of law .
Determining Value When Market Prices Are Unavailable
The IRAS has provided clarity on scenarios where the open market price of qualifying IPRs is not readily ascertainable. Taxpayers and valuers must now consider specific factors to determine the expenditure qualifying for writing-down allowances. This addresses long-standing uncertainty in valuing unique or specialised intellectual property where comparable market transactions are limited or non-existent.
Allocation Requirements in Business Acquisitions
A significant clarification addresses complex transactions where IPRs are acquired as part of a business acquisition or bundled with other assets. The IRAS now explicitly requires a detailed breakdown of the IPRs’ value into qualifying and non-qualifying components. This allocation is crucial for ensuring that only eligible IPRs benefit from the tax allowances, preventing the spill-over of value from non-qualifying assets into the claim.
International Valuation Standards Endorsed
The updated guidance formally recognises internationally accepted valuation standards, including but not limited to the International Valuation Standards. This alignment with global best practices provides valuers and taxpayers with a clear benchmark for preparing robust valuation reports, facilitating smoother tax compliance and review processes.
Exclusion of Future Development Value
In a critical clarification that impacts acquisition structuring, the IRAS has specified that the valuation should exclude the value of future IPRs not present at the transaction date but expected to be developed after acquisition. This ensures that writing-down allowances are granted only for IPRs existing at the point of acquisition, preventing claims on contingent or speculative future developments.
Practical Implications
These clarifications carry significant weight as paragraphs 5.1.2, 5.1.5, 6.2 and 7 of the e-Tax Guide now have the force of law. Businesses must ensure that valuation reports commissioned for Section 19B claims strictly adhere to these requirements.
The enhanced guidance is expected to reduce disputes with tax authorities and provide greater certainty for companies investing in intellectual property, particularly those engaged in business acquisitions or related-party transactions exceeding $10 million, or unrelated-party transactions exceeding $40 million, where valuation reports are mandatory.
Source: IRAS website, 30 January 2026