CHAPTER 5: NEW PRODUCTS: DEVELOPMENT, PROMOTION, AND ADVERTISING

This framework helps address the various elements that can impact your tax liabilities and
optimize your tax strategy as you navigate the complexities of bringing a new product to market.
It's advisable to work with tax professionals who specialize in your industry and jurisdiction to
ensure compliance and maximize tax efficiency.
For a business to stay competitive, it must deliver products or services that are perceived to be
better, less expensive, or more convenient. Given competitors with the same objectives, this
implies a constant evolution in products. This chapter examines the tax aspects of this process
using the SAVANT framework.
The taxpayer may elect to claim Research and development expenditures as ordinary and
necessary expenses or as deferred expenses.
Ordinary and necessary expenses which are not chargeable to the capital account require that it
must be
a) Paid or incurred by the taxpayer during the taxable year
b) In connection with his trade, business, or profession and
c) The expenditures so treated shall be allowed as deduction during the taxable year when
paid or incurred
Research and development expenses may be treated as deferred expenses or expenses
chargeable to capital account (optional on the part of the taxpayer) and requires that it must be
a) Paid or incurred by the taxpayer in connection with his trade, business, or profession
b) Not treated as expenses
c) Chargeable to capital account but not chargeable to property of a character which is
subject to depreciation or depletion

Republic Act No. 7459 serves as the legal framework to protect the rights and interests of
its citizens overseas while promoting diplomatic relations with other countries. It also
outlines the career paths and responsibilities of individuals serving in the foreign
service.

“The technologies, their manufacture or sale, shall also be exempt from payment of license,
permit fees, customs duties and charges on imports.”

An important part of strategic analysis is the company’s tax status. If the company is in a net
operating loss (NOL) carryforward situation, the tax advantages of deductions may be low or
nonexistent.

Conversely, if the company is in the highest income tax bracket, cost and risk sharing is
maximized. In that case, depending on the tax status of the company, it can choose whether to
claim Research and development expenditures as ordinary and necessary expenses or as
deferred expenses.