BSI has called for a review on the legislation relating to ICT companies, who export Intellectual Property and Services.

We recommend that S55 of the Act be removed, as it does not fit with how an ICT company exports their product or service.

Example:-

An ICT Company sells its technology and services in a Country. They set up an overseas subsidiary company, who will sell the “product” or “service” through that subsidiary. All revenue generated and expenses incurred, are generally taken up in the books of the subsidiary. The revenue is transferred to the ICT Company through “Cost of Sales”, “Licence Fees” or “Royalties” and expenses incurred by the subsidiary are reimbursed by the ICT Company.

S55 disallows all expenses paid to a subsidiary or related company

If these expenses are eligible marketing expenses, and are taken up in the books of the ICT Company, they should be allowable, and revenue generated from Cost of Sales or licence fees from the subsidiary should be eligible.

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