Tax advisers are usually hard to please, but draft clauses for the 2012 Finance Bill and other tax updates published by the government on 6 December have been broadly welcomed, reports Nick Huber.
The proposed tax changes, including tax breaks for patent-related profit and a new rule for the taxation of companies’ foreign profits are part of a plan to simplify the tax system, close loopholes and encourage investment in the UK.
The government has published draft legislation for a lower corporation tax rate on profits that can be attributed to patents.
The ‘patent box’ tax scheme will allow companies to apply a 10% corporation tax rate on profits that stem from patents. It hopes to encourage pharmaceutical, manufacturing and defence businesses to do more research and development in the UK rather than abroad, creating jobs and boosting economic growth.
The Treasury said that most responses to its June 2011 consultation on a patent box welcomed the proposal, saying that it would improve the competitiveness of the UK corporate tax system for patent income and that it would encourage firms to invest in the UK rather than developing patents offshore.