With effective from year of assessment 2007 and to be gazetted by way of statutory order, many manufacturing companies which market their products through marketing companies within the same group will enjoy an extended double deduction on expenses incurred on advertising Malaysian brand names. Previously, this double deduction of advertising expenditure on the promotion of Malaysian brand name is solely enjoyed by the marketing company. Incidentally, the “Malaysian brand name” is defined under the existing Income Tax (Deduction for Advertising Expenditure on Malaysian Brand Name Goods) Rule 2002 as

• A brand name that is registered as a trade mark in Malaysia or in any country outside Malaysia under the law relating to trade marks to a registered proprietor that is a company incorporated in Malaysia where at least 70% of the issued share capital of the company is Malaysian owned.

The following are the conditions to enjoy this extended tax incentive:

• More than 50% of the company must be owned by the registered proprietor of the Malaysian brand name; and
• The deduction can only be claimed by one company in a year of assessment.

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