Thursday, 5 February 2015

UK: Transfer pricing makes a key contribution to maximising the value of Patent Box claims

As part of the Government's aim to encourage innovation in the UK and increase tax competitiveness, a 10% tax rate now applies to profits falling within the Patent Box.  This provides a significant tax saving compared to the main rate of corporation tax in the UK.
Despite prospective changes to the regime, the Treasury believes that the UK Patent Box remains attractive for international groups with significant operations in the UK as well as for UK-based businesses.  To this end, the UK tax authority (HMRC) are willing to provide taxpayers with some certainty over the basis, and hence, the quantum, of their Patent Box claims.
The application of transfer pricing principles may play a key part not only in the calculation of Patent Box claims but also in analysing and/or restructuring existing intra-group arrangements to establish, or enhance, the UK taxpayer's eligibility to make claims.
The regime is open to all UK companies, regardless of ultimate ownership, on worldwide profits.
Source & more info: PwC