Australia is one of the world leaders in innovation and R&D, but our current tax system fails to reflect the challenges of a competitive global economy, especially as it relates to domestic biotechnology and manufacturing.
Recently, the Abbott Government pledged to explore ‘patent box’ in Australia. The patent box Australia concept has already been adopted by many European countries and is currently before Congress in the U.S.
These schemes provide reduced tax rates on income attributable to patented IP.
The Patent Box will apply where a company invests in developing and commercializing unique IP which is subject to patent protection any profit which can be attributed specifically to that patented IP is eligible for a lower tax rate (usually between 5-15%).Australia is one of the world leaders in innovation and R&D, but our current tax system fails to reflect the challenges of a competitive global economy, especially as it relates to domestic biotechnology.
Last week, executives from R&D Tax Specialist firm, Swanson Reed, met with HMRC stakeholders in London to better understand the proposed ‘patent box’ regime.
Adam Rogers, Tax Principal said:
“Australia is lucky in that it has a regulatory environment that is strong compared to other parts of the world. However, we are finding ourselves unable to stop the ‘brain drain’, that being the movement of IP, and human capital offshore. The R&D Tax Incentive does little to solve the growing problem that a high tax country, like Australia faces, that being the transfer of Australian IP to low-tax jurisdictions for post development commercial activity, such as Southern Ireland. The ‘patent box’ concept should help make Australia more attractive in a growing environment of countries competing for the best and the brightest”.
The concept already seems to be working. Since the ‘Patent Box’ regime was introduced into the UK in April this year, GlaxoSmithKline committed to transfer $800 million worth of IP and related developments.
Australian Industry has welcomed the proposed changes.