News Release

Assembly passes biotech tax bill
 

East Bay Business Times - 6:45 PM PDT Wednesday, June 6, 2007

Article Last Updated: 6:45 PM PDT Wednesday, June 6, 2007

 

The California State Assembly Wednesday unanimously passed a bill which could assist biotechnology companies at risk of losing tax deductions awarded because the industries' long development cycles.

"Allowing biotechnology companies to deduct (net operating losses) over 20 years, instead of 10, encourages investments in medical science and provides additional revenue for emerging biotechnology companies," the bill's author, Assemblywoman Sally Lieber, D-Mountain View, said in an analysis of the bill.

As it stands, the state's net operating loss tax policy allows businesses to carry losses - usually on research and development - forward for up to 10 years. But since biopharmaceutical companies often take at least 15 years to become profitable, they generally don't have sufficient profits against which to offset the losses generated during the current 10-year limit.

"What this really can mean is that the industry would be able to capture a tax benefit from their investment in research and development in California," said Matt Gardner, President of BayBio and the bill's sponsor.
"What I think this signifies is the beginning of a new era where elected leaders across the state are competing to see who will become the new champions for biotech," Gardner said.

The bill, AB 1370, would have no fiscal effect until fiscal year 2019-2020, at which time the Franchise Tax Board estimates that $6 million in losses that would have expired will be used at a revenue loss of $300,000. Assembly members Mary Hayashi, D-Castro Valley, and Gene Mullin, D-South San Francisco, were joint authors.

 
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