QUEBEC BUDGET FOR 2020-2021: THE LIFE SCIENCES INDUSTRY: A KEY GOVERNMENT ALLY IN ATTRACTING INVESTMENTS, DEVELOPING QUEBEC’S ECONOMY, AND IMPROVING CITIZENS’ QUALITY OF LIFE
QUEBEC BUDGET FOR 2020-2021
BROMONT (Quebec) March 10, 2020 – BIOQuébec welcomes the Quebec government’s newly tabled, balanced budget for 2020-2021, which acknowledges the biotechnology and life sciences sector’s economic role.
"We have noted that the government's priorities are aligned with those of the companies and organizations that are members of the biotechnology and life sciences network. We are proud that some of our recommendations regarding financing and public policies were implemented. The measures found in this budget reflect our joint commitment to improving the public’s quality of life and to meeting the goals outlined in the Québec Life Sciences Strategy," states Anie Perrault, BIOQuébec’s Executive Director.
The Québec Life Sciences Strategy’s main objective is to attract $4 billion in private investment to Quebec by 2022 and make our province one of the five largest North American life sciences hubs. In November 2019, BIOQuébec released the results of a comprehensive study conducted by Deloitte to provide a situational analysis and propose concrete solutions to reduce the gap between current and projected measures and the needs of the industry to reach those two targets. Based on four key themes, the seventeen recommendations focused on addressing our industry’s issues regarding access to capital, marketing, access to the local market, the labour force, and entrepreneurship and mentoring.
In its 2020-2021 budget, the government has allocated $118 million to support the life sciences industry. BIOQuébec is particularly pleased with the following measures announced by the Quebec government:
$10.0 million to speed up the adoption and integration of innovations within the health and social services networks and to improve alignment between the network's needs and the research community's initiatives;
This amount is added to the Bureau de l’innovation’s budget in support of its mission, as recommended by BIOQuébec in its report.
$15.0 million to support CATALIS Québec to increase the number of clinical trials conducted by businesses in Quebec, facilitate collaboration between the different life sciences industry stakeholders, and speed up the development of innovative treatments;
$12.0 million to encourage greater use of artificial intelligence and thus support a new generation of life sciences entrepreneurs;
This amount will be managed by the MEI and details on its use will be released by the MEI at a later date.
$81.0 million to support Génome Québec and the Montreal Clinical Research Institute in increasing clinical and genomics research;
$10.0 million to enhance the Innovation Program and support a greater number of projects.
In addition to these announcements, BIOQuébec is especially thrilled with three tax measures that will have a significant impact on life sciences in Quebec and that are a direct response to requests it made over the past few months:
1. Implementing the Synergy Capital Tax Credit
To foster the development of innovative businesses, which need access to capital and business networks to develop fully, a new tax credit will be implemented. In short, the synergy capital tax credit will be available to corporations, other than financial institutions, real estate corporations or corporations whose activities consist mainly in making loans or investments, that allow for the purchase of capital stock shares of an eligible corporation in the life sciences sector, among others. The tax credit rate will be 30%, applicable to the value of the eligible investment. The minimum holding period for shares will be five years whereas the maximum annual tax credit per corporation will be non-refundable and capped at $225 000.
This new credit is in response to BIOQuébec's request to encourage Quebec capital to be invested in our biotechnology companies here in Quebec. Similar to an angel investor tax credit, but for corporate angel investors, this announcement delights BIOQuébec.
2. Introducing an Incentive Deduction to Foster the Commercialization of Innovations in Quebec
To promote Quebec companies’ competitiveness while encouraging the retention and recognition of intellectual property developed in Quebec, a new tax credit will be implemented. It will take the form of a deduction when calculating the taxable income of an eligible innovative corporation for a taxation year. This incentive deduction for the commercialization of innovations in Quebec (hereinafter referred to as the "IDCI") will apply as of 2021. The deduction will allow a corporation that commercializes an eligible intellectual property asset developed in Quebec to be taxed at an effective rate of 2% on the eligible portion of its taxable income attributable to such eligible intellectual property assets. Currently, the basic corporate tax rate in Quebec is 11.5%, which is a decrease of 9.5 percentage points compared to the general rate.
This measure replaces the Deduction for Innovative Corporations and is more appealing to businesses. It aims to encourage them to stay in Quebec to showcase and commercialize the fruit of their research, which also pleases BIOQuébec.
3. Eliminating the Eligible Expense Threshold for R&D Credits to Promote Collaboration with Research Bodies
To further stimulate innovation, which fosters the productivity and competitiveness of Quebec businesses, the tax legislation will be amended to eliminate the exclusion threshold for eligible expenses relating to a university research contract, an eligible research contract entered into with an eligible public research centre, a pre-competitive research project carried out in a private partnership, or dues or fees paid to an eligible research consortium. The elimination of the expenditure exclusion threshold will not apply to the refundable "R&D salary" tax credit.
This measure responds in part to a request from BIOQuébec to eliminate the $50,000 threshold. We would have preferred to have it apply to the R&D credit on salaries, but it is a good start. We will continue to request that the $50,000 threshold on salaries be included in future budget measures.
"Today's budget allows us to move forward and to view the future more positively. Over the next few months, we will work with the government on the possible solutions outlined in our report. We will focus specifically on the life sciences industry’s public policy requirements and financing needs to convince the government to incorporate our other recommendations into upcoming budget measures.
The biotechnology and life sciences industry creates wealth and tens of thousands of specialized jobs while being the source of discoveries, diagnostic tests, and treatments that save lives on a daily basis, locally and around the world,” adds Anie Perrault.
BIOQuébec, A Dynamic Network
BIOQuébec is Quebec’s largest biotechnology and life sciences network. BIOQuébec’s members include companies and organizations which operate at every level of the biotechnology and life sciences innovation chain. They are active in researching, developing, and commercializing new tests, drugs, and other life sciences-related products and services. BIOQuébec is committed to supporting the growth of Québec’s biotechnology and life sciences industry which creates wealth and specialized jobs, is focused on innovation and commercialization, and is dedicated to improving everyone’s health and quality of life.
Life sciences innovations have been introduced to the public through the L'innovation au Québec, c'est dans notre ADN public awareness campaign which was launched by BIOQuébec in 2016 with the support of key industry stakeholders. See www.innovationsante.quebec for more information.
BIOQuébec is also a partner in The Coolest Hotspot initiative, which seeks to attract investment and human capital to Quebec to foster and support our industry’s growth.
For more information, go to www.bioquebec.com
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Information
Anie Perrault, LL.L., ASC
Executive Director
aperrault@bioquebec.com | C.450-522-0615