UK Tax Change Lands GBP500m Glaxo Investment

by Jason Gorringe, Tax-News.com, London

02 December 2010

In the UK, Pharmaceutical giant GlaxoSmithKline plc (GSK) has announced plans to invest GBP500 million in new manufacturing facilities, creating 1,000 jobs.

The undertaking was made alongside UK Chancellor George Osborne’s announcement that the government is proposing to establish a ‘patent box’. The mechanism is a corporate tax incentive designed to encourage investment in R&D and related manufacturing in the UK by introducing a lower rate of corporation tax (10%) on profits generated from UK-owned intellectual property.

Commenting on the proposals, GSK CEO Andrew Witty said:

“The introduction of the patent box is a bold and forward-thinking measure which builds on the UK’s strength as a global centre of excellence for science and R&D. In the current challenging and uncertain economic environment, this is a welcome step by the Government to improve the attractiveness of the UK as a place for the private sector to locate and invest."

“When implemented, the patent box has the potential to transform the way in which the UK is viewed by companies such as GSK as a location for new investments in high added-value R&D and manufacturing."

GSK will now drive forward its plans to invest GBP500m in the expansion of a Hertfordshire-based drug plant, as well as building a new biopharmaceutical manufacturing plant.

The company will also be launching a new GBP50m UK Venture Capital Fund, focussing on investments in early stage healthcare companies.

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