Around the world governments are competing to bring in businesses -
both large and small - which will carry out research and development on
their shores.
Firms which arrive to carry out this kind of activity usually bring with them significant amounts of inward investment. This work has many spin-off benefits, such as employment, adding to the tax base, infrastructure creation of partnerships across different sectors, such as industry and education.
Globally, research and development (R&D) spending has increased in recent years. Nations are creating or expanding taxation incentives to lift the profile of this in business and industry.
Furthermore, they are passing legislation which creates financial benefits to push forward the commercialization of this kind of activity. These laws, when drawn together, are often called patent boxes. So if you have ever asked the question “What is patent box (PB)?” Then this article will attempt to answer that question and other related issues.
PBs are concerned with intellectual property (IP). They allow income related to these endeavours much greater relief than is normally given. In other words, companies involved many different kinds of development work which also includes exploration, have given a good incentive to push forward and crucially make their efforts financially beneficial to the economy as a whole.
To date a number of countries have introduced this style of legislation. They include Belgium, China, France, Hungary, the Netherlands and Spain. The UK will have a PB scheme in place by 2013. Meanwhile, the US is in the process of introducing a similar regime.
It is anticipated that the U.K.'s version of this kind of tariff relief will be that one of the most competitive implemented when looked at from a commercial viewpoint. This is because the tax rates will be lower and also because the laws do not insist that the activities or costs must be incurred within the UK, or that the IP be retained within this nation.
In comparison, China insists that work and casts take place in that country. In setting out to respond to what is patent box, other countries have created similar statutes that have a mix of features. They have attempted to try and find a balance for the organisation and the state as a whole. Currently Hungary is probably on par with England in terms of competitive legislation, as it too does not insist that activities, costs or IP be retained there, although its relief rate is not as high as Britain's.
Some analysts have raised questions about these steps forward. The first main observation when countries introduce laws that emulate existing arrangements is that these are new products and so there is no obvious evidence about their effectiveness.
In some instances it has been pointed out that the concept itself is not enough of an incentive to bring businesses into a given place to carry out research.
Designing this kind of setup can be very complex, especially when some key things have to be taken into account, such as what types of products and services can be included for the special toll. Next, if a business can use the product, this in itself creates a whole new set of administration and compliance concerns which can take up a lot of time and resources to process.
Finally, the competitiveness around the globe to legalise these processes means that there could come a time when anticipated increase in economic activity does not transpire. As well, another potential negative is that the hoped-for revenue from this type of income will be so low it will not provide any real benefit.
Firms which arrive to carry out this kind of activity usually bring with them significant amounts of inward investment. This work has many spin-off benefits, such as employment, adding to the tax base, infrastructure creation of partnerships across different sectors, such as industry and education.
Globally, research and development (R&D) spending has increased in recent years. Nations are creating or expanding taxation incentives to lift the profile of this in business and industry.
Furthermore, they are passing legislation which creates financial benefits to push forward the commercialization of this kind of activity. These laws, when drawn together, are often called patent boxes. So if you have ever asked the question “What is patent box (PB)?” Then this article will attempt to answer that question and other related issues.
PBs are concerned with intellectual property (IP). They allow income related to these endeavours much greater relief than is normally given. In other words, companies involved many different kinds of development work which also includes exploration, have given a good incentive to push forward and crucially make their efforts financially beneficial to the economy as a whole.
To date a number of countries have introduced this style of legislation. They include Belgium, China, France, Hungary, the Netherlands and Spain. The UK will have a PB scheme in place by 2013. Meanwhile, the US is in the process of introducing a similar regime.
It is anticipated that the U.K.'s version of this kind of tariff relief will be that one of the most competitive implemented when looked at from a commercial viewpoint. This is because the tax rates will be lower and also because the laws do not insist that the activities or costs must be incurred within the UK, or that the IP be retained within this nation.
In comparison, China insists that work and casts take place in that country. In setting out to respond to what is patent box, other countries have created similar statutes that have a mix of features. They have attempted to try and find a balance for the organisation and the state as a whole. Currently Hungary is probably on par with England in terms of competitive legislation, as it too does not insist that activities, costs or IP be retained there, although its relief rate is not as high as Britain's.
Some analysts have raised questions about these steps forward. The first main observation when countries introduce laws that emulate existing arrangements is that these are new products and so there is no obvious evidence about their effectiveness.
In some instances it has been pointed out that the concept itself is not enough of an incentive to bring businesses into a given place to carry out research.
Designing this kind of setup can be very complex, especially when some key things have to be taken into account, such as what types of products and services can be included for the special toll. Next, if a business can use the product, this in itself creates a whole new set of administration and compliance concerns which can take up a lot of time and resources to process.
Finally, the competitiveness around the globe to legalise these processes means that there could come a time when anticipated increase in economic activity does not transpire. As well, another potential negative is that the hoped-for revenue from this type of income will be so low it will not provide any real benefit.
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