Problems on patent box tax relief regime
The policy, which started in April of this year, has proved popular and indications are that business is being relocated to the UK.
The EC has previously raised concerns on the policy being "poorly targeted” because it provides tax relief on the income from successful ideas and not the underlying research activity. Apparently the EC also has a concern that a lot of the benefit will accrue to large, profitable firms that earn the majority of income from patents.
Among its other concerns are that the regime may provide tax advantages without requiring any real economic activity in the UK if, for example, where a business owns the patent in the UK but conducts research elsewhere. The commission has also said that the rules for determining eligible profits are not in line with internationally accepted principles.
The issue will be discussed by member states at a meeting of the Code of Conduct Group tomorrow. If the UK government does not successfully argue its position it will come under pressure to amend the policy – before most businesses have had a chance to claim any relief.
Date: 21st October, 2013
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