Tax treaty with U.S. will pave way for investment in Canadian biotechnology firms, says BIOTECanada

Removing administrative barriers under the Canada-US Tax Treaty for investors such as non-resident venture capital funds are a welcome change, and ease the way for investment in Canadian biotechnology firms according to trade industry association BIOTECanada.

“This change will create a great incentive to invest in our innovative Canadian firms, and that’s what we need to keep our emerging companies growing and continuing to bring new ideas from the lab to the marketplace.”

“We are pleased to see modifications to section 116, which were recommended by BIOTECanada and many others, implemented,” said Peter Brenders, president and CEO of BIOTECanada. “This change will create a great incentive to invest in our innovative Canadian firms, and that’s what we need to keep our emerging companies growing and continuing to bring new ideas from the lab to the marketplace.”

The announced changes to section 116, will remove double tax filing requirements and administrative delays that have to date turned many foreign venture capital and institutional investors away from investing in Canadian biotechnology firms.

BIOTECanada had called on the government to amend section 248 of the Income Tax Act to exclude shares of private corporations from taxation and create an incentive for foreign investors to enter Canada.

The budget also renewed funding for early stage research through the granting councils, including CIHR and Genome Canada, an important boost for the innovation economy. In addition, BIOTECanada lauds the announced $600 million over 3 years to help develop the innovation sector and attract talented people to strengthen world-leading research and development capabilities. BIOTECanada also welcomes the government’s announcement to start a comprehensive review of all R&D federal support to improve the federal contribution to innovation and economic opportunities for business. In a time of rapidly growing global competition, Canada needs to find new ways to increase our competitiveness. The government’s focus on innovation is a strong signal to our international competition.

BIOTECanada noted that biotechnology continues to play a growing role in all sectors of the Canadian economy. The sector has a direct contribution of $1 billion in research spending per year, and a broader contribution of 6.4 % to the GDP ($78.3 billion) through the bio-economy. This contribution is the greater than the automotive sector, or the forestry sector, underscoring the critical transformational role of biotech applications.

Source BIOTECanada

www.biotech.ca