Wednesday, December 16, 2009

Patent Box Regime: A concrete effort to commercialize IP in UK

Daily we hear about the knowledge based economy and long lectures are delivered on importance of commercializing IP. But now, the time has come to take some steps to actualize the concept of IP derived profits. Many countries of European Union have implemented what is called as “Patent Box” System. Under the new regime 50% of revenues arising from the letting of the right to use certain qualifying intellectual property (IP) rights are tax exempt.
Qualifying IP rights comprise exclusively of certain technological IP: patents, secret formulae or processes, designs or models, plans, or information concerning industrial, commercial or scientific experience.
Royalties from any other source (e.g., trademarks, copyright of literary, artistic or scientific work including cinematograph films, image rights, software, lease of industrial commercial or scientific equipment, etc.) are expressly excluded from this incentive.

It must be noted that the 50% exemption applies on gross income, so costs incurred in the development of the qualifying IP rights are fully deductible from the general taxable income at the regular rate (30% for 2008).
This has been applied in Belgium, Switzerland Spain and will be effective in UK in year 2013. But the effects are visible already. Europe’s largest drug manufacturer –GSK plans to increase its investment in Britain following a government decision to slash corporation tax for patent-derived income. The tax break scheme should also benefit Britain's biotechnology industry, which has struggled to find adequate funding during the credit crunch.
Though UK is not expecting quick results but they are nevertheless positive about the outcomes.

Source: The New York Times Dec 10, 2009‎

No comments: