Section 29
of Investment Incentives Order, 2001
Section 29
(1)
Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the qualifying income of a post pioneer company, and there is any chargeable normal income of the company, those unabsorbed allowances and losses shall be deducted against the chargeable normal income in accordance with the following provisions –
(a)
in the case where those unabsorbed allowances or losses do not exceed that chargeable normal income multiplied by the adjustment factor, that chargeable normal income shall be reduced by an amount arrived at by dividing those unabsorbed allowances or losses by the adjustment factor, and those unabsorbed allowances or losses shall be nil; and
(b)
in any other case, those unabsorbed allowances or losses shall be reduced by an amount arrived at by multiplying that chargeable normal income by the adjustment factor, and those unabsorbed allowances or losses so reduced shall be added to, and be deemed to form part of, the corresponding allowances or losses in respect of the qualifying income, for the next succeeding year of assessment in accordance with section 20 or 30 (as the case may be) of the Income Tax Act, and that chargeable normal income shall be nil.
(2)
Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the normal income of a post-pioneer company, and there is any chargeable qualifying income of the company, those unabsorbed allowances or losses shall be deducted against that qualifying income in accordance with the following provisions –
(a)
in the case where those unabsorbed allowances or losses do not exceed that chargeable qualifying income multiplied by the adjustment factor, that chargeable
Incorporating amendments until S 5/2011
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qualifying income shall be reduced by an amount arrived at by dividing those unabsorbed allowances or losses by the adjustment factor, and those unabsorbed allowances or losses shall be nil; and
(b)
in any other case, those unabsorbed allowances or losses shall be reduced by an amount arrived at by multiplying that chargeable qualifying income by the adjustment factor, and those unabsorbed allowances or losses so reduced shall be added to, and be deemed to form part of, the corresponding allowances or losses in respect of the normal income, for the next succeeding year of assessment in accordance with section 20 or 30 (as the case may be) of the Income Tax Act, and that chargeable qualifying income shall be nil.
(3)
Where a post pioneer company ceases to derive any qualifying income in the basis period for any year of assessment but derives normal income in that basis period, subsection (1) shall apply, with the necessary modifications, to any unabsorbed allowances or losses in respect of the qualifying income of the company for any year of assessment subsequent to that year of assessment.
(4)
Where a post pioneer company ceases to derive any normal income in the basis period for any year of assessment but derives qualifying income in that basis period, subsection
(2)
shall apply, with the necessary modifications, to any unabsorbed allowances or losses in respect of the normal income of the company for any year of assessment subsequent to that year of assessment.
(5)
Nothing in subsections (1) to (4) shall be construed as affecting the application of section 20 or 30 of the Income Tax Act unless otherwise provided in this section.
(6)
In this section –
“adjustment factor”, in relation to any year of assessment, means the factor ascertained in accordance with the formula
A
,
B
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where A is the rate of tax under section 35 of the Income Tax Act for that year of assessment; and
B is the concessionary rate of tax for that year of assessment at which the qualifying income is subject to tax;
“allowances” means the allowances under section 13, 14, 16, 16A, 17, 18 or 20
including unabsorbed allowances which arose in any year of assessment prior to the year of assessment 2002;
“chargeable normal income” means normal income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the normal income;
“chargeable qualifying income” means the qualifying income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the qualifying income;
“losses” means losses which are deductible under section 30 of the Income Tax
Act including unabsorbed losses incurred in respect of any year of assessment prior to the year of assessment 2002;
“normal income” means income subject to tax at the rate of tax under section 35 of the Income Tax Act;
“unabsorbed allowances or losses in respect of the qualifying income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the qualifying income;
Incorporating amendments until S 5/2011
(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020
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“unabsorbed allowances or losses in respect of the normal income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the qualifying income;
“qualifying income” means the income of a post-pioneer company in respect of its qualifying activities.