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The IPA is urging the government to introduce a patent box regime to enhance recent innovation incentives.
IPA CEO Andrew Conway says while the introduction of measures, such as the tax incentive for early stage investors, are “good steps” to encourage economic growth in Australia, a patent box regime will supplement these initiatives.
“The government has introduced a suite of measures which will help drive investment, economic growth and jobs in our transitioning economy by encouraging innovation, risk-taking and an entrepreneurial culture in Australia,” Mr Conway said.
“These are all good steps in the right direction to enhance Australia’s economic growth and future prosperity. However, the introduction of a patent box regime to supplement these initiatives would improve the prospects of intellectual property (IP) created in Australia being developed and exploited here.”
Mr Conway said some countries, including Britain, Ireland, Italy and the Netherlands, already offer a lower corporate tax rate for income from IP developed in their respective countries.
“Australian businesses face a challenging set of economic circumstances which can hinder the growth and success of businesses seeking to commercialise IP they have developed,” he said.
“Factors including high wage and operating costs, uncompetitive tax rates, limited access to start-up capital drive many businesses to take their IP offshore to countries that are more attractive and supportive by offering preferential tax regimes to attract development and manufacturing.”
Mr Conway says unless Australia introduces similar preferential tax regimes, “it runs the risk that the migration of IP and advanced manufacturing will continue to be attracted to low-tax jurisdictions”.