KPMG survey suggests tax executives are divided over impact of patent box
The government is using YouTube to promote the patent box, a new tax relief that has attracted controversy in recent weeks as multinationals’ tax arrangements have come under public scrutiny.
Companies will be able to pay UK corporation tax at a special rate of 10% on profits from exploiting patented inventions, under a reform that was announced in November 2010 and was enacted in Finance Act 2012 following consultation. Detailed guidance on the new relief is available on the HMRC website.
In the YouTube video, posted on Wednesday, exchequer secretary David Gauke said the government’s objective was to have the most competitive tax system in the G20.
‘This is part of that,’ he said. ‘We want to attract investment into the UK and this is an important area. The UK is traditionally very strong at developing lots of ideas and we want to make sure we exploit those ideas as well, and that benefits the UK economy.’ Comments are ‘disabled’ on the video, which has unusually poor sound quality.
Last December, in a feature titled ‘Tax Haven Britain’, the Sunday Times reported that accountants and lawyers were ‘rubbing their hands over the forthcoming patent-box boom’.
It added: ‘Alongside revamped tax credits for research and development, the scheme is set to make Britain a tax haven for innovative companies that register their inventions and designs here … Lower taxes could undoubtedly boost investment and jobs, but critics claim the new schemes could open up countless potential routes for abuse.’
The paper quoted Paul Johnson, director of the Institute for Fiscal Studies, as saying: ‘The distressing truth is that all governments do this. They fulminate against tax avoidance and then create the very complexities and loopholes that allow the avoidance industry to flourish.’
Last week KPMG said its sixth annual survey of tax competitiveness showed that ‘the UK is now the most attractive tax regime compared to key competitors’. Maintaining that position, the firm said, was ‘an important consideration amid the current debate on tax’.
KPMG reported that 46% of the senior tax executives interviewed felt that ‘preferential activity-based low tax regimes, in particular the proposed patent box proposals’ improve UK competitiveness.
‘However only slightly fewer (39% of total respondents) felt that although preferential activity-based regimes increased the UK tax system’s attractiveness, the patent box proposals did not achieve this.’
Addressing an audience in Mumbai on his recent trip to India, David Cameron did not refer to the patent box but said: ‘[In Britain] we are cutting the level of corporation tax on profits down to 21%. That is a good, low, competitive rate. [Businesses] should be paying that rate of tax rather than seeking ever more aggressive ways to avoid it.’
KPMG survey suggests tax executives are divided over impact of patent box
The government is using YouTube to promote the patent box, a new tax relief that has attracted controversy in recent weeks as multinationals’ tax arrangements have come under public scrutiny.
Companies will be able to pay UK corporation tax at a special rate of 10% on profits from exploiting patented inventions, under a reform that was announced in November 2010 and was enacted in Finance Act 2012 following consultation. Detailed guidance on the new relief is available on the HMRC website.
In the YouTube video, posted on Wednesday, exchequer secretary David Gauke said the government’s objective was to have the most competitive tax system in the G20.
‘This is part of that,’ he said. ‘We want to attract investment into the UK and this is an important area. The UK is traditionally very strong at developing lots of ideas and we want to make sure we exploit those ideas as well, and that benefits the UK economy.’ Comments are ‘disabled’ on the video, which has unusually poor sound quality.
Last December, in a feature titled ‘Tax Haven Britain’, the Sunday Times reported that accountants and lawyers were ‘rubbing their hands over the forthcoming patent-box boom’.
It added: ‘Alongside revamped tax credits for research and development, the scheme is set to make Britain a tax haven for innovative companies that register their inventions and designs here … Lower taxes could undoubtedly boost investment and jobs, but critics claim the new schemes could open up countless potential routes for abuse.’
The paper quoted Paul Johnson, director of the Institute for Fiscal Studies, as saying: ‘The distressing truth is that all governments do this. They fulminate against tax avoidance and then create the very complexities and loopholes that allow the avoidance industry to flourish.’
Last week KPMG said its sixth annual survey of tax competitiveness showed that ‘the UK is now the most attractive tax regime compared to key competitors’. Maintaining that position, the firm said, was ‘an important consideration amid the current debate on tax’.
KPMG reported that 46% of the senior tax executives interviewed felt that ‘preferential activity-based low tax regimes, in particular the proposed patent box proposals’ improve UK competitiveness.
‘However only slightly fewer (39% of total respondents) felt that although preferential activity-based regimes increased the UK tax system’s attractiveness, the patent box proposals did not achieve this.’
Addressing an audience in Mumbai on his recent trip to India, David Cameron did not refer to the patent box but said: ‘[In Britain] we are cutting the level of corporation tax on profits down to 21%. That is a good, low, competitive rate. [Businesses] should be paying that rate of tax rather than seeking ever more aggressive ways to avoid it.’
