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Tax change liberates more funds for research

Tax change liberates more funds for research

The New Zealand subsidiary of the pharmaceutical company, Merck Sharp and Dohme will get a 12.5 percent boost to their research budget under proposed tax law changes.

The changes are part of a package of GST reforms contained in the Taxation (Annual Rates, GST and Miscellaneous Provisions) Bill currently before the Finance and Expenditure Select Committee.

"They zero rate services provided to non-residents in relation to exported goods and also information services provided to non-residents that involve goods in New Zealand," Revenue Minister Michael Cullen said.

“All companies providing these types of services will benefit from the changes. For example, testing food products for export will be zero-rated, delivering considerable cost savings to business.?

Merck, Sharp and Dohme welcomed the changes this week as an example of the ?leadership role politicians and policy advisors can play in building the knowledge economy we all want in New Zealand?

The company told the select committee that the roughly $300,000 savings they expected to make as a consequence of the change would be ploughed back into research.

"They also plan to hire another tertiary qualified researcher and expect to be more competitive in bidding for new research contracts from their parent company as a result of the tax change," Dr Cullen said.

ENDS

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