Newsletter
MOF REINTERPRETS RULES FOR DECLARING BUSINESS START-UP COSTS
In an order dated 28 October 1999, the Ministry of Finance (MOF) reinterpreted the rules for declaring the cost of setting up a business. Two main areas are covered:
Declaration of expenditure
1.Necessary expenditure incurred for the purpose of setting up a for-profit enterprise, such as promoters' remuneration, lawyers' and accountants' fees, company formation and registration fees, promoters' meeting or founding meeting expenses, share offering and underwriting expenses, and other expenditure directly related to setting up the enterprise, shall be declared as start-up costs and amortized from year to year from the date on which the business starts operating, in accordance with the provisions of the tax laws.
2.Expenditure not incurred for the purpose of setting up the enterprise cannot be treated as start-up costs, and should be declared as current year expenditure unless it qualifies as actual cost of assets under Article 45 of the Income Tax Law, or as deferred expenditure under the relevant tax legislation.
Applicability
The above rules apply to the start-up expenditure of enterprises set up since 1 January 1998. However, where an enterprise has already declared its start-up expenditure in accordance with the rules previously promulgated by the MOF in 1975, the two rules may still be applied if they are more favorable.