Transfer Pricing Associates

Should the UK join the Patent Box regimes?

Posted on Tuesday June 19, 2012

In our article “TheNextPatentBoxRegime: TheUK”, we review the plans by the UK to join the Patent Box regime by 2013.

For those unfamiliar with the Patent Box, it is an incentive put in place to give preferential tax treatment on the profits received as a direct result of patents.

In short, companies selected for the Patent Box initiative will pay 10%, as opposed to 20%-24% in taxes on those profits directly attributable to the patent held.

Do you think that this tax cut is enough to induce companies to keep their patented product production or patented processes in-house? What if other regions apply the same Patent Box but with even higher tax-cuts? Those companies may then still have an incentive to move production abroad.

What about the calculation of the relevant patent related cash flows, is it a straightforward method or will it add complications to the tax calculations?

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