A group representing Australian medical manufacturers and exporters has proposed taxation changes to a Senate inquiry into Australia’s innovation system.
The group – including Cook Medical Australia, AusBiotech, the Medical Technology Association of Australia, and the Export Council of Australia – has proposed an Australian Innovation & Manufacturing (AIM) Incentive, which has similarities to “Patent Box” schemes seen in countries including the UK, Switzerland and China.
The scheme would offer a reduction in tax payable from profits “derived from the commercialisation of qualifying intellectual property (IP) (mainly, patents or licences to patents)” within Australia.
Its aim is to create jobs as well as further investment in Australian manufacturing.
“We have proposed the AIM Incentive to support local innovators and manufacturers, so they can maintain their global competitiveness and cultivate domestic innovation, all while attracting the commercialisation of additional international IP to Australia,” said Dr Anna Lavelle, Chief Executive Officer of AusBiotech, in a statement.
The UK’s patent box scheme, introduced last year, lowers corporation tax to 10 per cent for the revenues that qualify from the usual 23 per cent.
Barry Thomas, Managing Director of Cook Medical, has said that the current R&D Tax Incentive encourages the development of Australian IP, but not the local development and manufacturing based on it.
“The criteria for qualifying IP is extended to patents, copyright, registered designs, licenses and 'know-how'. Also included in the qualifying IP criteria would be companies that manufacture products offshore, provided that Australia will derive a significant net benefit from its sale overseas,” he explained of the AIM proposal in an opinion piece for Manufacturers’ Monthly earlier this year.
“Qualifying IP can either be developed in Australia or in-sourced from outside of Australia.”
Submissions to the Senate inquiry can be viewed here.