Last week saw a sudden and unexpected joint proposal from the UK and Germany that would make changes to preferential intellectual property tax regimes, including the UK Patent Box, a key part of the fiscal landscape for attracting and retaining life science companies to the UK. The proposed changes will be under discussion this week at the OECD/G20 summit in Brisbane as part of the Base Erosion and Profit Shifting (BEPS) project. BEPS is an extremely broad tax project regarding the determination on a country by country basis of the taxable profits of multinationals. Patent boxes are just part of one of 15 workstreams.
This new proposal does not appear to represent any change in the intention of the UK patent box regime, ie it does not propose abolishment of a regime providing a lower tax rate on profits generated from patents. What it does address are the rules that underlie such schemes and how to define “substantial activity”, in the context of mobile income and assets such as IP. The OECD has suggested three approaches for consideration – value creation, transfer pricing and the nexus approach. The UK patent box scheme is at present based on a transfer pricing approach (as articulated by Treasury Minister David Gauke MP at the BIA’s UK Bioscience Forum) where substantial activity was to be determined in the context of the location of key functions. This new proposal outlines a nexus approach which permits a jurisdiction to provide benefits to income arising out of IP so long as there is a direct nexus between the income receiving benefits and the expenditures contributing to that income.
If the proposal is approved by the OECD/G20 this week the intention would be to work towards a new nexus-compliant UK patent box with effect from July 2016. Existing IP in the current regime at that date will be “grandfathered” and allowed to apply the old rules until 2021.
At this stage it is difficult to say what the precise implications could be across the sector if this proposal is adopted. The BIA is working and will continue to work with members, government and wider stakeholders on this issue and it is the top agenda point at our Finance and Tax advisory committee this week. Please get in touch with myself of Pamela Learmonth if you would like to engage directly with us on what will be an ongoing policy project.
Later this week, UKTI plan to launch a new website which will contain a searchable database and map of UK Life Science companies, making public some of the database from which they’ve sourced the ‘Strength and Opportunity’ reports on the sector published in recent years. The draft website can be accessed here http://ukti.cargodev.co.uk and any comments should be addressed to email@example.com. The BIA has endeavoured to help BIS check their data is accurate over the years to the best of our knowledge but we do not own or administer this database. UKTI have asked us to share the following statement with members in advance of the official launch, which gives detail advising on the collection of data and the origin of it.
“The name, location and segmentation of companies included in the UK Life Sciences website have been drawn from the Bioscience and Health Technology Database which is owned by the Office for Life Sciences within the Department for Business, Innovation and Skills. Turnover and employment information is sourced from a third party on a commercial basis and drawn from reported figures or estimated figures (where there is no requirement for the company to submit accounts). It is presented in bands as individual company information cannot be released. The data shown for each company and location is sourced at site or location level for employment and for turnover the bands represent UK life science derived turnover estimated to arise from activity at that site.
Information on company names and addresses has been obtained from a range of sources including web-searches and lists provided by trade bodies and life sciences networks. The short descriptions of the companies activities have been obtained from their own public website. The segmentation of company activity has been determined broadly by the company’s main business activities in the UK using publicly available information. No confidential information has been included in the website but there is the option for companies to opt-out if they prefer.”
The BIA has long advocated that enabling global partners to better see the strength and opportunity within companies in the UK life science ecosystem should be core to UKTI’s life science mission and we hope that this new initiative can play a key role. We would also appreciate any feedback you have about this initiative or the website.
Remaining on the topic of websites, the latest version of the Scrip antimicrobial resistance microsite is now live – and free to view. Check it out here: http://www.scripintelligence.com/amr/
Last week’s synbio trade mission brought together a delegation of representatives, pictured above, from 14 UK companies – ranging from start ups to a seed fund and including the BIS synbio entrepreneur in residence plus representatives from the SynbiCITE Innovation and Knowledge Centre and Innovate UK – to exchange knowledge and ideas over three immersive days in San Francisco while visiting local companies and the SynBioBeta conference.
A highlight for all was the opportunity to hear from keynote speaker J Craig Venter on his body of work from the last decades and where he is turning his attention to now, such as remote DNA sequencing, which he terms ‘bio-teleportation’, with a view to testing for life on Mars. Keep an eye out for our blogs from the mission which will be published shortly.
I’ve already heard some very positive feedback from delegates about the opportunities they’ll be following up as a result of the trade mission. Together with BioPartner UK we run many missions throughout the year so if you’re interested do take a look.
It was also good to see Jeremy Hunt talking about the importance of innovation in his speech at the King’s Fund, recognising the role that it plays in unlocking personalised cures for illnesses and stating “we want the NHS to spearhead a global revolution in personalised medicine based on individual genetic characteristics”. He also used the speech to announce Dame Fiona Caldicott as the new National Data Guardian.
The Alliance for Regenerative Medicine’s 2nd Annual EU Advanced Therapies Investor Day also took place last Thursday and I was pleased to be able to attend. It was a great day and fantastic to see presentations from BIA members Oxford BioMedica and ReNeuron, in addition to a keynote speech from GE Healthcare Life Sciences President and CEO, Kieran Murphy. For those of you who are interested, the webcast of all talks, panels and company presentations will be available on the event website in a couple of weeks.
Look forward to seeing some of you at our Manchester breakfast on Wednesday and the BIA will be out in force at the FT, Jefferies, ABPI, Consillium and AMRC events through the week.