R&D tax credits passed by US House
lower House votes to renew the tax credit system.
The US drug development sector received a boost from the House of Representatives who passed the Tax Relief and Health Care Act of 2006 (H.R. 6111) that will, if also passed by the Senate, extend the research and development tax credit to the end of 2007.
The extension should help to maintain the US's position of superiority on the worlds R&D stage with taxpaying businesses expected to save $16bn (€12bn) over the next five years, according to Jim Greenwood, president and CEO of the Biotechnology Industry Organisation (BIO).
BIO had sent a letter to the House, urging Congress to extend and strengthen the R&D credit before the adjournment of this years Congress.
Commenting on the need for Congress to pass the Act, Greenwood said: "Failure to immediately and retroactively extend the R&D credit prior to adjournment would adversely impact annual earnings-per-share for all companies who would have otherwise claimed the credit."
"For highly research-intensive bioscience and medical technology companies, particularly those that must raise funds in the capital markets, this could seriously destabilise their position in the marketplace."
The R&D tax credit, which had been in place for 25 years, expired at the end of 2005 leading to fears that the US would become a far less viable place to invest in R&D.
The tax credit system for investment in R&D was widely seen as one of the primary reasons why the US currently leads the world in bioscience research and development. The Pharmaceutical Research and Manufacturers of America invested an estimated $39bn in 2005 with industry-wide spending valued at a record $51bn.
Greenwood continued: "Governments around the world have created the necessary infrastructure and are now offering US companies highly competitive and valuable long-term, contractual incentives to attract new investments in research and related manufacturing facilities".
"The extension of the R&D credit will help biotechnology companies conducting research in the US compete and win in the global economy".
