The art of writing is the art of discovering what you believe.
Gustave Flaubert

Monday 3 January 2011

Patent box

A preferential tax regime for profits arising from patents, treating the royalties arising from their exploitation, plus the "embedded" royalties in the profits from products made under the patents, separately from other taxable income. The UK government announced in November 2010 that it would introduce such a scheme, and it published a consultation paper entitled Corporate Tax Reform: Delivering a More Competitive System, part IIB of which dealt with intellectual property taxation. It claims:
The Patent Box will encourage companies to locate the high-value jobs and activity associated with the development, manufacture and exploitation of patents in the UK. It will also enhance the competitiveness of the UK tax system for high-tech companies that obtain profits from patents.
 How any tax scheme can encourage the "manufacture ... of patents" is far from clear. The compliance costs associated with taking advantage of the arrangement are expected to be considerable, as detailed records are needed.

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