{"id":10820,"date":"2022-03-24T10:21:11","date_gmt":"2022-03-24T10:21:11","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=10820"},"modified":"2022-03-24T10:21:13","modified_gmt":"2022-03-24T10:21:13","slug":"new-patent-box-scheme-in-australia","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/new-patent-box-scheme-in-australia\/","title":{"rendered":"New Patent Box Scheme in Australia &#8211; An Overview"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The\nGovernment of Australia is intending to introduce a Patent Box Scheme in\nAustralia with the aim of promoting life sciences innovation across the region\n&amp; incentivising investment in the sector in response to the Covid-19\npandemic. On May 11, 2021, the new beneficial tax scheme was introduced by the\nFederal Government of Australia in its Budget.<\/p>\n\n\n\n<p>In\nthis new scheme, income from certain medical technology &amp; biotechnology\nPatents will benefit from a reduced cooperate tax rate of 17%, well below the\nstandard corporate tax rate of 30%, although small &amp; medium-sized companies\ncan benefit from a reduced rate of 25%. It&#8217;s hoped that this lower tax rate\nwill boost extra investment in biotechnology and medical technology sectors in\nAustralia and promote the development or advancement of innovation with the\nregion, rather than offshore. Scroll down to check more information regarding\nthe Patent Box Scheme in Australia.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a445f709d5\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a445f709d5\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/new-patent-box-scheme-in-australia\/#What_is_a_Patent_Box\" title=\"What is a\nPatent Box?\">What is a\nPatent Box?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/new-patent-box-scheme-in-australia\/#Details_of_the_Patent_Box_Scheme_in_Australia\" title=\"Details of the\nPatent Box Scheme in Australia\">Details of the\nPatent Box Scheme in Australia<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/new-patent-box-scheme-in-australia\/#Benefits_of_a_Patent_Box_Scheme\" title=\"Benefits of a\nPatent Box Scheme \">Benefits of a\nPatent Box Scheme <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/new-patent-box-scheme-in-australia\/#Who_will_benefit_from_the_new_Patent_Box_Scheme_in_Australia\" title=\"Who will\nbenefit from the new Patent Box Scheme in Australia?\">Who will\nbenefit from the new Patent Box Scheme in Australia?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/new-patent-box-scheme-in-australia\/#Reason_behind_introducing_a_Patent_Box_Scheme_by_the_Government\" title=\"Reason behind\nintroducing a Patent Box Scheme by the Government\">Reason behind\nintroducing a Patent Box Scheme by the Government<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/new-patent-box-scheme-in-australia\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Patent_Box\"><\/span>What is a\nPatent Box?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before\nwe discuss the Patent Box Scheme in Australia, let&#8217;s understand the meaning of\na Patent Box. A Patent Box is a tax scheme that provides a lower tax rate for\nsome sort of income derived from certain forms of IP or Intellectual Property;\ntypically, Patents but sometimes other forms of Intellectual Property like\nCopyright &amp; Designs material. The policy objective of Patent Boxes is to\nencourage R&amp;D and the commercialisation of Intellectual Property.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Details_of_the_Patent_Box_Scheme_in_Australia\"><\/span>Details of the\nPatent Box Scheme in Australia<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>From July 2022, the new Patent Box Scheme in Australia will become operational exclusively for <a href=\"https:\/\/swaritadvisors.com\/patent-registration\" class=\"text-primary\"><strong>Patents<\/strong><\/a> in the medical technology or biotechnology sectors granted after May, 2021. The new Patent Box Scheme in Australia will only be available to Australian companies.<\/p>\n\n\n\n<p>The\nPatent should be owned by an Australian Company and the income generated should\nbe received by an Australian Company\/an Australian permanent establishment of a\nforeign company. It will also be a requirement that R&amp;D underpinning the\nPatent should have been carried out in Australia. The Federal Government has\nfurther said it would consult on whether the regime or scheme should be\nextended to cover Patents in the clean energy sector.<\/p>\n\n\n\n<p>The\ndetailed mechanics of how the new Patent Box Scheme in Australia will operate\nhaven&#8217;t yet been confirmed, although the Government has shown that it will\nfollow the guidelines of OECD or Organisation for Economic Cooperation &amp;\nDevelopment.<\/p>\n\n\n\n<p>Given\nthe global economic &amp; health impacts of the Covid-19 pandemic, it&#8217;s\npredictable that the Government of India is prioritising health &amp; life\nsciences innovation. However, the decision of the Federal Government to\nintroduce a Patent Box to incentivise innovation was unexpected since earlier\nproposals to introduce a Patent box had been rejected.<\/p>\n\n\n\n<p>The\nfinding of an examination of identical Patent Box Regimes in Europe and the UK\ndetermined that a Patent Box Scheme would be questioned and ineffective its\nefficacy in encouraging innovation, as per a report published by the\nGovernment.<\/p>\n\n\n\n<p>All\nmanufacturing income from Patents is presently excluded from the scope of the\nproposed new Patent Box Scheme in Australia. This is disappointing and is\nlikely to knowingly limit the benefits of the new regime to biotech businesses,\nthe businesses the Federal Government is seeking to incentivise.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_a_Patent_Box_Scheme\"><\/span>Benefits of a\nPatent Box Scheme <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare the benefits of the Patent Box Scheme:<\/p>\n\n\n\n<ol><li>By facilitating a concessional\ntax treatment, Patent boxes may encourage or promote firms to Patent inventions\nthat would have otherwise been kept secret.<\/li><li>Patents boxes could encourage\nor foster the commercialisation of research as the tax incentives are output\nbased.<\/li><li>Based upon the specific design\nof Patent boxes, they could lessen the erosion of the domestic tax base by\npromoting firms to commercialise Research &amp; Activity which has occurred\nlocally.<\/li><li>Increased volume of Patents\nmeans increased revenues for the Patent Office and greater disclosure of\ntechnical knowledge.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_will_benefit_from_the_new_Patent_Box_Scheme_in_Australia\"><\/span>Who will\nbenefit from the new Patent Box Scheme in Australia?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nproposal has the capability to benefit the biotechnology &amp; medical sector,\nwhich comprises pharmaceutical companies. It will be larger or bigger companies\nthat derive the most benefit because MNEs or Multinational Enterprises tend to\napply for &amp; own more Patents than local SMEs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reason_behind_introducing_a_Patent_Box_Scheme_by_the_Government\"><\/span>Reason behind\nintroducing a Patent Box Scheme by the Government<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Research\n&amp; Development activities are extensively perceived to have positive\nbenefits that spill over to other parts of the economy &amp; benefit the rest\nof society. As such, some Governments attempt to promote Research &amp;\nDevelopment activities via a combination of direct investment and tax\nincentives.<\/p>\n\n\n\n<p>Presently,\nover 20 countries have some form of Patent or Intellectual Property box tax\nregime. While Patent Box Tax Schemes can differ extensively in their scope,\nthey are mostly designed to achieve\/accomplish some or all of the following\nobjectives:<\/p>\n\n\n\n<ul><li>Promote increased investment in <strong>Research &amp; Development<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Research_and_development\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup> activities;<\/li><li>Prevent the erosion of the domestic tax base that can happen when mobile sources of income are transferred to other nations;<\/li><li>Encourage increased investment in R&amp;D activities.<\/li><\/ul>\n\n\n\n<p>The\nassumptions underlying the world have progressively sought to change their tax\nregimes to incentivise the acquisition &amp; retention of Intellectual\nProperty. This competition between nations has resulted in ever more extensive\ntax regimes that enable big MNCs to access low tax rates for Intellectual\nProperty related income without contributing noteworthy amounts of Research\n&amp; Development expenditures in the host country. The OECG considers this\nsort of competition to be a damaging tax practice. In other terms, Patent Box\nTax Schemes can possibly give rise to risky tax practices\/lead to a race to the\nbottom if they are designed\/implemented poorly.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nPatent Box Scheme, as now proposed, will give a concessional corporate tax rate\nof 17% to a portion of income received from the exploitation of Australian, European,\nor US Patents granted after May, 2021 that are associated with therapeutic\ngoods listed on the ARTG, where the income is attributable to the taxpayer\u2019s\ntechnology development underlying that Patent in Australia.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Government of Australia is intending to introduce a Patent Box Scheme in Australia with the aim of promoting life sciences innovation across the region &amp; incentivising investment in the sector in response to the Covid-19 pandemic. On May 11, 2021, the new beneficial tax scheme was introduced by the Federal Government of Australia in [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":10822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[55],"tags":[1004],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/10820"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=10820"}],"version-history":[{"count":7,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/10820\/revisions"}],"predecessor-version":[{"id":10828,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/10820\/revisions\/10828"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/10822"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=10820"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=10820"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=10820"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}