Taxand USA discusses the major patent box legislative proposal presented in the US House of Representatives.
A patent box tax regime allows a reduced tax rate on profits derived from intellectual property (IP). The expressed goal of patent boxes is to encourage businesses to maintain their IP in the country where it was developed by offering a reduced tax rate on profits generated by a company’s in-country IP.
Many issues will have to be resolved before patent box legislation is enacted in the US. The primary questions to be resolved are:
In answering these questions, can the calculation be kept relatively simple?
Discover more: US patent box: will it be a box of chocolates or Pandora’s Box for taxpayers?
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Given the way a patent box is administered, companies that benefit the most are those with large manufacturing operations that are very profitable. A company spending a great deal on research that is short on investment with no present profits receives no tax assistance to help it arrive at the next great technology.
