Australia’s Assistant Treasurer has confirmed that the Government will consider the so-called “patent box” tax rules to assist Australian manufacturers of patented goods. Such rules are directed to lowering tax rates on profits associated with patented goods. Their intention is to encourage investment within Australia by high technology industries such as biotechnology.
Peak industry bodies are finalising proposals for these rules which they hope to put to the Government ahead of Australia’s Federal budget in May. Patent box rules have been implemented in countries such as UK, The Netherlands, Belgium, France, Ireland, Spain, Luxembourg, Switzerland and China. In addition, the US is currently contemplating its own patent box scheme.
It remains to be seen what proposals are put forward in relation to the patent box tax rules and whether or not the Government will adopt the proposals. However, in a global environment where significant economies are implementing such tax incentives for manufacture within their borders, it would seem likely that to remain competitive Australia will need to consider adopting similar measures.