Patent Box: substantial activities
HMRC seeks views on how to legislate the new framework covering tax reliefs for profits from patents and other similar intellectual property.
The UK Patent Box gives companies a reduced rate of tax on their profits from patents and similar intellectual property (IP). It is intended to provide incentives for companies to patent IP developed in the UK and to ensure new and existing patents are further developed and commercialised in the UK.
The Organisation for Economic Cooperation and Development (OECD) has been coordinating a multinational effort to address Base Erosion and Profit Shifting (BEPS). This is tax planning by multinational enterprises (MNEs) that exploits gaps and mismatches in tax rules to artificially shift profits to low tax locations where there is little or no economic activity. This has resulted in a new international framework for preferential IP regimes.
This work means that there will be some necessary changes to the Patent Box, to ensure it is consistent with these international standards.
This consultation paper seeks views from businesses, representative bodies, and other interested parties on how the UK can form a set of rules for the Patent Box that will comply with this international framework, and protect the availability of this benefit in order to continue to promote growth and drive investment in the UK.