The Tax Institute welcomes the opportunity to make a submission to the Treasury in relation to the Patent Box discussion paper on policy design, July 2021 (the Discussion Paper).
The Tax Institute supports the introduction of a patent box which is consistent and compliant with the Organisation for Economic Co-operation and Development (OECD) Base Erosion Profit Shifting (BEPS) Action 5 Minimum Standard.
The overall success of the patent box depends on a number of factors. Businesses will require certainty that the regime is commercially viable for them to apply and rely on. This will be evident in the legislation that gives effect to the patent box as well as the way in which it is proposed to be administered. While there are aspects of the legal framework for the research and development tax incentive (R&DTI) which are a useful starting point, the patent box has nuanced requirements which require a nuanced approach.