Several industry bodies have come out publicly in support of the Patent Box legislation that was introduced into parliament yesterday, however some have cautioned that more needs to be done to boost medical and biotechnological innovation in Australia.
The Tax Concessions for Medical Innovation Bill 2022 offers a concessional 17 per cent company tax rate on profits from patents registered in Australia after May 11 2021, which is less than the current corporate tax rate of 30 per cent for large companies, and 25 per cent for smaller and medium enterprises.
It will be ringfenced to the medical and biotech sectors with the aim of encouraging R&D operations to remain in Australia.
Dean Whiting, CEO Pathology Technology Australia, says the legislation is a good starting point, but further interventions will be needed to ensure the industry has a sustainable future.
“PTA and our members certainly welcome the initiatives in the Patent Box legislation. It is good to see the detail and we look forward to witnessing how this benefits our manufacturers in their endeavours to develop innovative new technology in Australia,” he said.
“The Patent Box initiative addresses one of the barriers Australian companies developing technologies in the in vitro diagnostics space face, by being able to recover the cost of patenting an invention via a tax break on Australian revenue derived from selling that invention here.
“In order for this to be completely effective, further barriers to companies selling their inventions in Australia need to be addressed. PTA will be releasing a policy paper aimed at describing those barriers and providing solutions so that Australians can benefit from sustainable sovereign capability to manufacture and sell these high tech devices here.”
AusBiotech CEO, Lorraine Chiroiu notes that a well-designed patent box will support Australian manufacturers to remain competitive on an international scale by bridging the gap between R&D and commercialisation.
“AusBiotech notes the progression of the patent box legislation as a positive first step,“ she said.
“AusBiotech looks forward to the establishment of an expert working group, with industry representation, to support the implementation of the patent box scheme – in order for Australia to realise the benefits of this important incentive.”
“This tax concession, from AusBiotech’s perspective, aims to support Australian medical innovators to be globally competitive, retain value creation from home-grown research and IP, and to support sovereign capability. Its purpose is to make it more genuinely viable for businesses to retain this value creation and manufacturing in Australia, including providing an incentive to industry to locate the associated high-value jobs at home.”
Due to patent box schemes in other countries, Australia’s corporate tax rate of 30 percent has been a significant hurdle in relation to taxation of IP income.
MTAA CEO, Ian Burgess, said the introduction of the Patent Box legislation was the first step in helping create a more globally competitive market in Australia that stacks up against similar and competing jurisdictions.
“While the introduction of the Bill is the result of years of hard work by MTAA, together with other health sector stakeholders, there is still more work to be done to ensure the design of the Patent Box is fit-for-purpose, and achieves its objectives,” Mr Burgess added.
“MTAA looks forward to working with the Government, through the formation of a permanent working group to support the Government’s objectives and processes to implement and refine the Patent Box scheme.”
Medicines Australia CEO, Elizabeth de Somer, said that incentivising the commercialisation of innovative medical and biotechnology products in Australia through the patent box is an important first step in supporting home-grown innovation.
“This legislation is a welcome first step, and we will continue to encourage stronger and bolder incentives to promote and protect Australian innovation,” Ms de Somer said.
“The proposed design of the patent box, tabled in Parliament yesterday, could go further to attract multinational biopharmaceutical companies to invest in developing or manufacturing medicines and vaccines onshore.
“Australia still faces significant barriers, such as a smaller population and remote geographical location to other jurisdictions. We look forward to a continuing constructive partnership with the Government to increase the competitiveness of the patent box.
“Medicines Australia will be engaging with the Government on implementing this legislation and to introduce improvements, as appropriate.”
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