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ARTICLE · 03 JUNE 2024

Canada's Proposed Patent Box Regime: A Transfer Pricing Perspective

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In January 2024, the Department of Finance released a consultation paper on a proposed patent box regime, aiming to tax income from certain intellectual properties (IP) at preferential rates lower than the current federal rate.

CanadaIntellectual Property
André Bergeron
André Bergeron
Pierre Alary
Pierre Alary
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In January 2024, the Department of Finance released a consultation paper on a proposed patent box regime, aiming to tax income from certain intellectual properties (IP) at preferential rates lower than the current federal rate.

The consultation, which ran until April 15, sought feedback on seven key questions on the suitability of a patent box regime, and the appropriate design of such a regime if Canada were to adopt one. The potential adoption of a patent box initiative is designed to incentivize companies to conduct research and development (R&D) and commercialize their resulting IP within Canada.

The consultation paper acknowledges that Canada faces challenges in attracting and retaining IP. Notably, the paper mentions that businesses in Canada outlay more to entities in other countries for the use of IP than they receive from international sources for the same purpose. The government therefore hopes that implementing a proposed patent box regime could serve as

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