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UK pharma welcomes government reforms

Published on 30/11/10 at 01:19pm

The UK pharma industry has responded warmly to government plans to review how best to create optimum conditions for private sector growth.

Health and life sciences are among the areas targeted by chancellor George Osborne and business secretary Vince Cable in a package of proposed tax reforms which includes the introduction of a ‘patent box’.

In a joint statement, organisations including the Association of the British Pharmaceutical Industry (ABPI) and Association of British Healthcare Industries welcomed the review document.

The path to strong, sustainable and balanced growth is “a promising road map to enable the UK to build its vibrant life sciences sector”, they said.

Cable said the state could not lay out plans for how the economy will grow – because “growth is delivered by the private sector”.

“What we can do is provide the conditions to promote a new economic dynamism, harnessing our strengths, removing the barriers and putting the private sector first when it comes to decisions on tax, regulation and spending,” he added.

The BioIndustry Association (BIA), vocal in its criticism of Osborne’s June budget for upping capital gains tax for higher rate tax payers, is certainly happier with this week’s development.

It is particularly keen on the patent box’s preferential tax regime of 10% for profits arising from patents, which “will result in a significant change of attitude towards the UK as a location for R&D and manufacturing”, said BIA chief executive Nigel Gaymond.

“This will ultimately stimulate interest and investment in the UK’s bioscience companies,” he added.

There will also be a review of R&D tax credits – “already a vital incentive for smaller businesses,” the BIA says - to reflect proposals of the Dyson Review

“The stage is set for a resurgence in UK life sciences,” commented ABPI director general Richard Barker.

The Treasury has also announced a series of reforms to the corporation tax regime in addition to the patent box.

These include a commitment to legislate an opt-in exemption for profits earned in foreign branches of UK companies in 2011 – meaning these profits would no longer be liable to tax in the UK.

All these measures are part of what Osborne calls “the government’s drive to remove the barriers to growth and improve British competitiveness”.

Businesses are encouraged to make their representations on the stimulus they would like to see, and government departments will be expected to make their contributions too.

They will present action plans to a ministerial ad hoc group, which will meet before the end of the year and then another five times before next year’s budget.

Chaired by Osborne and Cable, it will address issues such as reforming planning, competition, trade and investment, regulation, access to finance and corporate governance.

Construction, retail, manufacturing, and digital and creative industries are among the other business sectors targeted by the review.

Adam Hill

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