12. Apart from those allowable deductions mentioned in the above Q&A, are there any other allowances available under Profits Tax assessments?

12. Apart from those allowable deductions mentioned in the above Q&A, are there any other allowances available under Profits Tax assessments?

The taxpayers may also enjoy "depreciation allowances" as follows: 

a) Industrial Building Allowances on capital expenditure incurred on the construction of industrial buildings and structures used in certain trades:

• Initial allowance: 20% on the cost of construction of the premises.
• Annual allowance: 4% on the cost of construction of the premises.
• Balancing allowance or charge will be due upon disposal of the premises.

b) Commercial Building Allowances on capital expenditure on construction of such building or structure which is not an industrial building:

• Annual allowance: 4% on the cost of construction of the premises.
• Balancing allowance or charge will be due upon disposal of the premises.

c) Plant and Machinery Allowance on capital expenditure incurred on the provision of plant and machinery for the purpose of producing chargeable profits:

• Initial allowance: 60% on the cost.
• Annual allowance: at rates of 10%, 20% or 30% as prescribed by the Board of Inland Revenue in the Inland Revenue Rules, on the reducing value of the asset. Items qualifying for the same rate of annual allowance are grouped under one "pool".
• A balancing allowance is available only on cessation of a business to which there is no successor. A balancing charge can, however, arise whenever the disposal proceeds of one or more assets exceed the reducing value of the whole "pool" of assets to which the disposed items belong.