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UK "Patent Box" Program Slashes Corporate Taxes on Patent Income

By Peter Zura

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)

Full post as published by Two-Seventy-One Patent Blog on December 10, 2009 (boomark / email).