In a written ministerial statement issued on Tuesday (3 December), financial secretary to the Treasury David Gauke confirmed that the OECD has adopted all of the proposals put forward by the UK and Germany to resolve uncertainty over the future of preferential intangibles regimes, such as the UK’s patent box.
Gauke confirmed that ‘the UK and three other countries supported the “transfer pricing” method, a significant majority of OECD–G20 members supported the alternative modified nexus method [and] the UK expressed concerns about the modified nexus approach, but in the interests of reaching agreement on this important issue, agreed to work with Germany to try to find a compromise position,’ and that the joint UK–Germany compromise proposal, which amended the modified nexus approach, was welcomed by the Forum of Harmful Tax Practices and the Code of Conduct Group at their meetings from between 17–20 November.
Carmen Aquerreta (Deloitte) said the announcement was good news for the UK. ‘We’re another step closer to finalising the future direction of the UK’s innovation tax regime, and companies that have been delaying decisions can move forward. We have an excellent track record of investing in R&D. Many UK groups have significant historic R&D spends which will translate into substantial future patent box claims.’ She added: ‘Detailed rules on tracking and tracing R&D costs still need to be agreed. We expect the OECD to consult on the detailed rules, and UK business should be prepared to make its views known. Now is the time to start thinking about how to make the nexus method work in practice.’
Jonathan Bridges (KPMG) commented on the timing of the planned introduction of the proposals: ‘Interestingly, the announcement appears to introduce a hard June 2016 deadline for electing in under the current regime. If this is the case, this differs from initial indications from government officials that the grandfathering provisions would be linked only to whether IP is defined as pre or post June 2016 IP.’
In a written ministerial statement issued on Tuesday (3 December), financial secretary to the Treasury David Gauke confirmed that the OECD has adopted all of the proposals put forward by the UK and Germany to resolve uncertainty over the future of preferential intangibles regimes, such as the UK’s patent box.
Gauke confirmed that ‘the UK and three other countries supported the “transfer pricing” method, a significant majority of OECD–G20 members supported the alternative modified nexus method [and] the UK expressed concerns about the modified nexus approach, but in the interests of reaching agreement on this important issue, agreed to work with Germany to try to find a compromise position,’ and that the joint UK–Germany compromise proposal, which amended the modified nexus approach, was welcomed by the Forum of Harmful Tax Practices and the Code of Conduct Group at their meetings from between 17–20 November.
Carmen Aquerreta (Deloitte) said the announcement was good news for the UK. ‘We’re another step closer to finalising the future direction of the UK’s innovation tax regime, and companies that have been delaying decisions can move forward. We have an excellent track record of investing in R&D. Many UK groups have significant historic R&D spends which will translate into substantial future patent box claims.’ She added: ‘Detailed rules on tracking and tracing R&D costs still need to be agreed. We expect the OECD to consult on the detailed rules, and UK business should be prepared to make its views known. Now is the time to start thinking about how to make the nexus method work in practice.’
Jonathan Bridges (KPMG) commented on the timing of the planned introduction of the proposals: ‘Interestingly, the announcement appears to introduce a hard June 2016 deadline for electing in under the current regime. If this is the case, this differs from initial indications from government officials that the grandfathering provisions would be linked only to whether IP is defined as pre or post June 2016 IP.’
