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Pharma firm confirms £500m manufacturing investment is due to patent tax break

Out-Law News | 22 Mar 2012 | 1:05 pm | 1 min. read

A major pharmaceuticals company will invest £500 million in UK manufacturing facilities after the Government confirmed it would operate a special tax regime for income derived from patents. 

GlaxoSmithKline (GSK) said that it would build a new manufacturing facility in Ulverston in Cumbria, its first new facility in the UK for 40 years. It said it would invest £100m in existing facilities in Irvine and Montrose.

In December the Government published draft legislation on a 'patent box' regime which will allow companies to elect to apply a 10% rate of corporation tax to all profits attributable to qualifying patents, whether paid separately as royalties or embedded in the sales price of products. The regime will also apply to other qualifying intellectual property rights such as regulatory data protection and supplementary protection certificates. This followed the publication of a consultation paper (52-page / 573KB PDF) on the design of regime last June.

As part of yesterday's budget the Government confirmed that the Finance Bill 2012 will include the draft legislation to implement the patent box and that it will come into force from 1 April 2013.

"The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain," said GSK chief executive Sir Andrew Witty.

"It is hoped that the Patent Box will encourage companies to locate the high-value jobs associated with the development, manufacture and exploitation of patents in the UK and maintain the UK’s position as a world leader in patented technologies," said tax law expert John Christian of Pinsent Masons, the law firm behind Out-Law.com.