Press Room
Intellectual property rights given a boost by the
government
- Further good news for Multinationals
Today's Pre-Budget Report announcement of a "patent box" regime
with a 10% rate of corporation tax on income from patent rights
will help stem the exodus of businesses with intellectual property
(IP) rights from the UK - BUT only from April 2013 says leading
business and financial adviser Grant Thornton.
Similar provisions have been in place in the Benelux countries
for a number of years where the tax rate is closer to 5% and the
scope is wider to include other intellectual property as well as
patent rights.
"Today's announcement is a step towards making the UK a great
place from which to operate as a multinational business. The
Treasury will raise much more tax by introducing the 10% rate on IP
income than it would by maintaining the current tax system and
encouraging groups to locate their IP abroad. It is just such a
shame that the new rules will not come into force until 2013.
Businesses need all the help that they can get and any delay is not
helpful" says Paul Smith, Head of International Tax at Grant
Thornton.
"Another welcome announcement for international groups is that
the Government is looking at exempting foreign branch profits from
the scope of UK corporation tax. This is unlikely to be a
significant tax cost for the Government as a credit for foreign tax
on foreign branch profits reduces pound for pound any UK tax on
such profits. However, it will reduce the administrative burden on
companies with such foreign branches. It will also avoid the need
for companies with foreign branches in low taxed countries (i.e.
where the tax rate is below the UK tax rate of 28%) to incorporate
in order to avoid further UK tax on the foreign branch profits,"
concludes Smith.
The expected announcement of further reforms to the Controlled
Foreign Companies(CFC) legislation has been delayed slightly and
will not be announced until the New Year
For more information please contact:
Paul Smith, Head of International Tax, 07814 497 826
Suvra Datta, press office for Grant Thornton UK LLP, on 0207 728
2375 or