UK "Patent Box" Program Slashes Corporate Taxes on Patent Income
The UK is introducing a "patent box" regime that will impose a lower rate of corporate tax on patent income as an attempt to boost to Britain's creative industries. The government has yet to release details of how the scheme will operate, although Chancellor of the Exchequer Alistair Darling confirmed in his pre-budget speech to the House of Commons on December 9 that patent income (e.g., royalites) will be subject to a 10% rate of corporate tax after legislation is passed. This would represent more than a 50% cut.
Before passing any legislation, the government intends to consult with industry, and final legislative proposals are unlikely to emerge until the 2011 Finance Bill. The program is scheduled to be put in effect after April 2013.
It didn't take long for Glaxo to announce that it expected to spend some 500 million pounds building a new factory to make biotech drugs and on expanding an existing plant to make next-generation respiratory medicines.
See:
NYT: "Patent Tax Scheme Encourages Glaxo to Invest In UK" (link)
TimesOnline: "Pre-Budget Report 2009: Industry welcomes 10% 'patent box'" (link)
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I've heard from other sources that this measure, "technically" a cut, actually constitutes a new tax. If so, I fail to see how the move would help either R&D or patent law. Can anyone provide more details yet as to how this new regime is supposed to work?
Does anybody know whether the rules would apply to purchased patents? I didn't find any reference to it in either of the articles cited.
Thanks,
Daniel Steinert
Ocean Tomo, LLC
This sounds like a great way of supporting the commercialisation of IP. Are there any updates to this post?
UK's Patent Box Regime:
UK’s announcement to establish a “patent box” regime serves to boost UK’s innovator industry. UK government has proposed that it will impose a lower corporate tax rate on profits generated from patents in UK. The government has decided to introduce a 10% corporate tax rate on patent income in view to support and encourage innovation. The details on the functionality of the scheme are yet to be disclosed, however, the scheme is believed to operate from April 2013.
The forethought and support extended by the UK government through patent box will be well appreciated by companies looking at investing in... to read more, log on to www.sinapseblog.com
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