The federal government is currently seeking public opinions on the possibility of instituting a “patent box regime”. A patent box regime provides a preferential tax rate to income derived from certain types of intellectual property in order to incentivize research and development. Patent box regimes are already in place in 13 European Union member states, among other countries.

According to the Consultation Paper, Canadian entities currently pay more money to foreign entities to use foreign intellectual property than foreign entities pay into Canada to use Canadian intellectual property. As of 2021 Canada had a net loss of more than US$5 billion for the use of intellectual property. Comparatively, the G7 average in 2021 was a net income of approximately US$20 billion. The proposed “patent box regime” is intended to encourage IP development in Canada and thereby eliminate this net loss in intellectual property licencing.

The consultation is open until April 15, 2024. Further information on the consultation may be found here.