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Amazon Moves Global R&D to London
Opinions have been split over the effectiveness of the UK's patent box, despite the country's innovation tax regime being given a boost this week with the news that the online retailer, Amazon, is to open its global R&D development centre in London later this year.
Provisions contained in the UK tax code, including the scheduled patent box regime, which allows for a reduced 10% corporate tax rate for profits attributed to patents, are believed to have contributed to Amazon's decision.
Kevin Hindley, managing director at Taxand UK, said the talented London workforce would have been a major attraction for Amazon.
"The primary reason for looking to London as a location for a tech R&D hub is the availability of a skilled local workforce," said Hindley.
He said incentives such as the patent box regime are not attractive enough on their own to bring investment to the UK, though he encouraged companies to assess the overall benefits available to them if they are interested in expanding in London or other parts of the country.
"It is doubtful whether the patent box regime of itself would pull in this kind of investment as the base of the patent box is too narrow and the rewards too slight. That said, any company making such an investment should look at the available tax incentives in the round," said Hindley. "R&D tax relief can provide a super deduction of 130% of the underlying costs that qualify and the often forgotten R&D capital allowances can be very advantageous to such a project. These reliefs alongside the patent box make the UK an attractive place for tech R&D."
First published in the International Tax Review, 24 July 2012