The Canadian Advanced Technology Alliance (CATA) wants the government to cut taxes to income gained as a result of intellectual property ownership.
By creating a “patent box” checkmark area on tax returns to indicate the income was earned as a result of intellectual property sales or development in Canada would encourage more corporations to conduct research and development activities here, CATA says. It says other countries have adopted similar approaches with the Netherlands, Belgium, Hungary, Luxembourg, the UK, China, and Spain included.
CATA is specifically pointing to The Netherlands practice that allows unlimited income claimed under a broad definition of intellectual property, taxing it at the lowest rate available in that country of five per cent. If Canada were to shift its taxation focus to encourage companies to commercialize technology here, it could be a boon for the economy.
The Dutch division of Pricewaterhouse Coopers examined the Dutch Innovation box in a 2010 report. It notes the Dutch tax rate on intellectual property related income was slashed from 10 per cent to five per cent in 2010 with passage of a new budget.
In a 15-minute interview on the CATA Web site, Pricewaterhouse Coopers tax experts Vik Sachdev and Nick Pantaleo discuss the idea of a “patent box” which is also sometimes called an “innovation box.” It gives an overview of international experience with the practice, and endorses that Canada adopt the lower corporate tax rate as well.
Russ Roberts, CATA’s senior vice-president of advocacy, explains the “patent box” idea.
The alliance is calling on its members to contact their local MP to advocate for the patent box.