The Intellectual Property Development Incentive (IDI) scheme was introduced to encourage the use and commercialisation of IP arising from R&D activities of the taxpayer.

An approved IDI company will be eligible for a reduced tax rate of either 5%, 10%, or 15% on a percentage of qualifying income derived from the commercialisation of certain IP.

The percentage is determined by the modified nexus approach set out in the Action 5 report of the OECD base erosion and profit shifting (BEPS) project. The concessionary tax rate will increase at regular intervals as prescribed in the Income Tax Act.