| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


How to use our RSS feed

Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.


Finfacts is Ireland's leading business information site and you are in its business news section.


Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




Content Management by interactivetools.com.

News : Innovation Last Updated: Nov 30, 2010 - 4:53:34 AM

UK government to cut patent income tax to 10%
By Finfacts Team
Nov 30, 2010 - 12:14:50 AM

Email this article
 Printer friendly page

UK Chancellor of the Exchequer George Osborne on Monday announced a 10% tax on patent income to encourage high-tech business “to invest in the UK and create high-value jobs here."

The proposal to tax income from newly commercialised patents at 10% from 2013 was welcomed by the pharmaceutical industry but as usual, there were demands for an extension of coverage.

The new tax doesn't apply to royalties and brands - - is there a single method of valuing a brand?

 Chris Sanger, head of tax policy at Ernst & Young said: “Despite pressure from UK businesses, the Coalition has retained the policy of the previous government in relation to the development of a UK patent box. The reduced rate of tax will continue to only apply to patents, rather than a wider range of intellectual property such as royalties and brands, but will now cover imbedded patent income.

“This will be a disappointment to multinationals outside of the pharmaceutical industry, but perhaps not a surprise given the messaging to date and the state of the public finances.

“For IP (intellectual property), other than patents, migrating the assets offshore will probably be caught by the new CFC (Controlled Foreign Company) rules, but multinationals may be tempted to build new centres of development in other, more attractive, countries.”

Osborne told MPs that the UK biggest drugs company GlaxoSmithKline planned to create 1,000 jobs in the UK during the lifetime of projects that would take place as a result of the policy. GSK said it planned to construct a £10m “green chemistry” laboratory at the University of Nottingham and a £50m venture capital fund, in addition to a £500m Hertfordshire manufacturing centre and biopharma plant it announced when the patent box proposals were put forward last December.

The Treasury also launched a review of the R&D tax credit regime.

Ireland has a tax exemption on patent income and patents are parked in Ireland by multinational companies to take advantage of the benefit, even though the research and development work may have been done elsewhere.

The government also on Monday published details of its Corporate Tax Reform programme consisting of a series of essential reforms designed to improve the UK’s tax competitiveness. Measures include the introduction of new Controlled Foreign Company (CFC) rules.

The government wants Britain to be a place for businesses to invest. That is why it said the June Budget announced the reduction of corporation tax for large and small businesses with a cut in the main rate from 28% to 24% over the next 4 years and a reduction in the small profits rate from 21% to 20% from April 2011.

However, the government said it recognises that a competitive corporate tax system is not just about rates. That is why the government has published the document ‘Corporate Tax Reform: delivering a more competitive system’. This document is designed to provide certainty to business over the government’s plans, as it works with them to deliver this ambitious programme of reforms.

Today’s tax reform announcements include:

  • a Corporate Tax Road Map that commits to principles that will underpin these reforms and a clear timetable to deliver these changes, including how the government will engage with business at each stage of policy development;
  • details on how the government will reform the UK’s outdated Controlled Foreign Company (CFC) rules by introducing more targeted rules in 2012 and how they will apply to financing and intellectual property. As a first step to make the rules more competitive, a package of interim improvements will be introduced in 2011;
  • introducing a patent box in April 2013 - - a 10% CT rate on profits from patents, reaffirming the Government’s commitment to retain and build on the existing Research and Development (R&D) tax credit scheme to create the right environment for innovative companies to prosper;
  • a commitment to legislate an opt-in exemption for profits earned in foreign branches of UK companies in 2011. Under this more territorial approach, companies in the new regime will no longer be subject to UK CT on their foreign branch profits.

The Exchequer Secretary to the Treasury, David Gauke MP said: “In recent years, too many businesses have left the UK amid concerns over tax  competitiveness. It’s time to reverse this trend. Our tax system was once viewed as an  asset.  And it needs to be an asset again."

“That is why the Government is prioritising corporate tax reform. Responding to the  concerns of business, the UK is headed for a more competitive, simpler, and more stable  tax system in the future, creating the right conditions for investment”

Chris Sanger of Ernst and Young added: “The Corporate Tax (CT) Roadmap, released today, has set the direction that the government wishes to take the UK tax system. It focused on a competitive and stable corporate tax system, with the hope that these key elements will ultimately result in greater investment in the UK. However, the big question is whether the government will be able to maintain the course and ensure that the road map is adhered to.

“It was notable that the roadmap did not significantly follow the theoretical ‘map’ presented earlier this month by the Institute of Fiscal Studies, and instead represented a more pragmatic approach to the tax system. The Exchequer Secretary to the Treasury has previously stated that simplicity and fairness aren’t mutually exclusive and the CT Roadmap reinforces this approach.

“That said, the UK’s corporation tax rate will still remain some way behind some of its competitors, but the government clearly believes that other aspects of the tax system, such as certainty and a favourable loan interest regime, will overcome this disadvantage.”

Related Articles
Related Articles

© Copyright 2010 by Finfacts.com

Top of Page

Latest Headlines
Digital Taylorism: Amazon's chief rejects depiction of "soulless, dystopian workplace"
Most surviving startups do not grow; Tiny number powers jobs engine
Despite euro dip China & US remain most competitive manufacturing nations
Business startup rates up in most OECD countries led by Australia and UK
NASA's Kepler mission has confirmed the first near-Earth-size planet
Energy subsidies at 6.5% of global GDP; Commodity prices to remain weak
US startups rely on personal savings, debt; Venture capital funds less than 1%
Europe produces 13 $1bn+ "unicorn" startups in one year; London is Europe's digital capital
Irish-based firms raised €120m in VC funding in Q1 2015; Some top recipients Irish for tax purposes
Ireland: Fourth highest 25-34 year old ratio of third-level graduates in developed world: So what?
Business dynamism/ employer firm startups in US secular decline
Innovation Union Scoreboard 2015: Sweden, Denmark, Finland and Germany are on top
Education systems failing to provide students with skills for success in 21st century
US, Switzerland, Denmark, Sweden, Finland have best higher education systems
Handbook of Service Innovation: Ireland moving up the value chain?
Switzerland revives silk industry that thrived for two centuries
Sales of Irish tech firms create 300 millionaires in 15 years and no scaleups
Apple warns of 'material' tax payments from EU's Irish tax investigation
Apple earnings surge 33% on higher price and iPhone sales jump in China
Big Pharma's internationalisation of R&D to China
The dangers of romanticising entrepreneurs despite key role
UK and Irish business R&D heavily reliant on foreign-owned firms
Silicon Valley and the development of the silicon microchip - Part 2
Ireland: Innovation with or without R&D/ scientific breakthroughs
UK government most open/ transparent in world; Ireland & Greece lowest ranking in Europe
10 questions about Switzerland's Solar Impulse aircraft – answered
Silicon Valley loses its silicon; Typical household income stagnates - Part 1
21st century skills are 18 century skills + a computer
Growing ICT sector in Europe accounts for 5% of employment
Should Ireland copy Singapore's scientific research investment plan?
Startups vs Scaleups: 4% of UK startups have 10+ employees 10 years later
Irish patent filings at European Patent Office fell in 2014
Facebook's maze of privacy settings maybe in breach of European law
Apple to invest €1.7bn in Irish and Danish data centres
Silicon Valley insider warns of dodgy $1bn valuations of private companies
Israel's Startup Nation not a jobs engine; Nor is Irish high tech
Established industries often beat new technology investment returns
Ireland: Noonan said EU to drop Apple tax case; Now expects court case
Irish R&D Tax Credit: No evidence of rising business innovation; Facts don't matter
Apple reports biggest profit of a public company in history