Tax and Technology

S. 1761. Introduction

1.1. Background

1.1.1. Goods to Knowledge: The Growing Role of Intellectual Property

The shift from a goods-based to a knowledge-based economy has been one of the defining economic trends of the past few decades. While goods-based economies centre around producing and distributing physical products, knowledge-based economies are characterized by producing and disseminating ideas, information, and intangible goods and services. Moreover, as intangibles gain prominence, ownership over intellectual property controlling these intangible assets has become pivotal in value creation and economic growth.

Intellectual property refers to legal rights granted to natural and legal persons for their creative and innovative works including, but not restricted to, patents, trademarks, copyrights, and trade secrets. These rights let owners control their works’ use, distribution, and profit derivation.

The primary drivers of economic growth in the digital economy are knowledge and innovation embodied in intangible assets. By leveraging these assets to create competitive advantages, companies that own intellectual property controlling them can create residual profits. For intangible asset...