Multinational pharmaceutical giant GlaxoSmithKline (GSK) is reportedly set to transfer 150 overseas research projects to the United Kingdom to take advantage of the newly introduced Patent Box.
The Patent Box, which was introduced on 1st April 2013, is a tax regime that allows UK companies to elect to pay a reduced rate of corporation tax on profits attributable to patents and certain other forms of intellectual property (eg, supplementary protection certificates for pharmaceutical products). A company seeking to benefit from the Patent Box must:
- Have a qualifying IP right.
- Actively hold that IP right.
- Have an income related to that right (eg, sales of patented products).
The Patent Box is designed to incentivise innovative companies to develop new patented products in the United Kingdom. The overriding policy objective is to encourage these companies to locate the high-value jobs associated with the development, manufacture and exploitation of patents in the United Kingdom and maintain the country's position as a world leader in patented technologies.
This latest news follows on from GSK's warm welcome of the UK government's initial proposals to create a Patent Box. In late 2010 chief executive officer Andrew Witty said:
"For GSK, the successful introduction of the Patent Box will enable us to increase investment in communities where we have existing facilities by scaling up current manufacturing and building a significant new plant. With a more IP-friendly environment, we also plan to launch a new UK venture capital fund and invest in new technologies such as green chemistry. In total, these new investments in the UK would be worth more than £500 million.”
Thus, although critics have touted the idea that the Patent Box is simply a tax avoidance device, in the pharmaceutical sector at least it is showing signs of having a positive effect on UK business.
This article first appeared in IAM magazine. For further information please visit www.iam-magazine.com.