Presently, expenditure incurred on overseas advertising of Malaysian products including Malaysian branded products is eligible for a double deduction for income tax purposes. Expenditure incurred on local advertising only qualifies for a single deduction. As a measure to promote the marketing of local branded products, it is proposed in the Budget Speech that the expenditure incurred on local advertising be granted a double deduction. To be eligible, the following criteria must be satisfied: a. the company is at least 70% Malaysian-owned; b. the brand is owned by the company and is registered in Malaysia; and c. the company's product must achieve export quality standards. The proposal is to be effective from year of assessment 1998.       Presently, tax incentives in the form of pioneer status and investment tax allowance are granted to companies undertaking research and development (R&D) activities which encompass designing, prototyping and testing. To strengthen the foundation for a more integrated R&D in the future, it is proposed that incentives be granted to companies which merely carry out designing or prototyping. Testing which is undertaken as a separate activity does not qualify for these incentives as it does not form an integral part of R&D. The R&D incentives are: a. pioneer status; or b. investment tax allowance; or c. double deduction on:   i. expenditure for inhouse R&D;   ii. expenditure on R&D undertaken in an approved R&D institution.

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