Section 18 : Research and development expenses

1) For the purposes of computing the income earned by any person from any business in any income year, such person may deduct the research and development expenses to the extent incurred in the operation of that business in that year.

2) Notwithstanding anything contained in sub-section (1), in computing the limit of expenses deductible under that sub-section in any income year, it shall not exceed fifty percent of the adjustable taxable income of all businesses operated by such person.

3) Any excess expense or part thereof which is not deductible in excess of the limit referred to in sub-section (2) may be capitalized and depreciated pursuant to Schedule II at the beginning of the upcoming income year.

Explanation: For purposes of this Section, “research and development expenses” means the expenses incurred by any person for the purpose of controlling and developing his business and improving commercial production and process.

Provided that such expenses shall not include the cost at the time of acquiring any property referred to in sub-section (3) of Section 1 of Schedule II.