nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2021‒11‒29
two papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Corporate Income Tax, IP Boxes and the Location of R&D By Pranvera Shehaj; Alfons Weichenrieder
  2. Intellectual Property licenses in cross-border insolvency: Lessons from In Re Qimonda By Ram Mohan, M.P.; Gupta, Aditya

  1. By: Pranvera Shehaj; Alfons Weichenrieder
    Abstract: The paper discusses the effects of the corporate tax on local R&D expenditures by multinational enterprises (MNEs) when income from intellectual property (IP) may or may not benefit from a special IP regime. Our model shows that an increase of the standard corporate tax may have positive effects on the R&D expenditures in the country that carries out the corporate tax increase. The possible positive R&D effect results from a tax asymmetry: not all R&D returns are subject to the higher tax. First, since R&D creates a public good within the MNE, some of the R&D benefit is taxed at other countries’ tax rates that are not subject to the tax increase. Second, some of the R&D benefits are taxed at a lower IP regime tax rate. Therefore, a higher corporate tax, which increases value of the cost deductibility of R&D, may actually foster R&D. This expectation is empirically supported by country-by-country R&D data of U.S.-owned subsidiaries for countries that have an IP regime.
    Keywords: corporate income tax, R&D, intellectual property regimes, patent box, international profit shifting
    JEL: H25 H26 O30
    Date: 2021
  2. By: Ram Mohan, M.P.; Gupta, Aditya
    Abstract: Introduced in 2016, the Insolvency and Bankruptcy Code overhauled the Indian insolvency regime. Five years young, the work in progress Code is now in the process of adopting the Cross-Border insolvency, which was omitted from its original mandate. In 2018, a legislatively appointed committee suggested that the Code should adopt the UNCITRAL Model Law on Cross Border Insolvency. However, the Committee overlooked a crucial jurisprudential guideline, which coloured the interpretation of the Model Law, which was delivered in a cross-border insolvency dispute between American and German regimes. An American bankruptcy court subjected the German administration of American Intellectual Property assets to a protection exclusively available within the American Bankruptcy Code. This paper studies the American judicial decisions in the Samsung v. Jaffe dispute to identify and underline the importance of its directive. The study reveals that there is virtually no guidance on how an intellectual property license is treated within the Indian insolvency regime. The authors underline the importance of such guidance considering the proposed adoption of the Model Law and suggest legislative inquiry in the issue.
    Date: 2021–11–19

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