November 24, 2006 10:31 ET

BIOTECanada Responds to the Federal Government's Economic Update

OTTAWA, ONTARIO--(CCNMatthews - Nov. 24, 2006) - Canada's biotechnology industry foresees positive potential in several key policy commitments announced in the federal government's economic update yesterday.

"Canada's industry needs an environment that fosters increased investment and supports continued research and development." said Peter Brenders, President & CEO, BIOTECanada. "The gains made in Canadian biotech over the past 20 years have been hard fought. Few industries are more globally competitive and to maintain our place in the world, serious obstacles need to be addressed. The government's policy commitments send encouraging signals," he said.

BIOTECanada has been telling the federal government changes are needed to Canadian tax laws to encourage investment. "We're pleased to see the federal government will be working to improve cross-border cash flows and making it easier and less costly for Canadian businesses to access money from investors across Canada and the world," said Brenders. Currently, Canada does not recognize U.S. Limited Liability Corporations (LLCs). As a result, these important investment vehicles are subject double taxation, which is a powerful disincentive against investment in Canada. Recognition of LLCs in the tax treaty will open this key investment pool and improve the sustainability of Canada's biotech companies.

The federal government has been a strong supporter of research in Canada, but it is also recognizing the need for the private sector to grow on its own. "The creation of a science and technology strategy can be achieved in a timely way and must include changes to our tax credit system," said Brenders.

BIOTECanada continues to push for two vital improvements to the Scientific Research and Experimental Development (SR&ED) refundable tax credit program: (i) an update of the annual research and development (R&D) expenditure limit set in 1985 at $2 million to a more appropriate $10 million, and (ii) the removal of the current Canadian Controlled Private Corporation (CCPC) restriction. Canada's growing industry looks to expand R&D and improve the success rate of commercialization of innovative products. Creating a business environment conducive to innovation relies on these basic changes.

About BIOTECanada

BIOTECanada is dedicated to the sustainable commercial development of biotechnology innovation in Canada. It is the national association representing the broad spectrum of biotech constituents including emerging and established companies in the health, agricultural, and industrial sectors, as well as academic and research institutions and other related organizations.

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