We have certainly noted that companies from several countries were registering their patents in these countries, precisely to reduce the taxes they pay on intellectual property.
I expect these countries feel that it is preferable to have a certain percentage of something rather than 100% of nothing. As you said, this could create a race to the bottom. There are two ways to fight this problem.
First, there could be a time limit on the patent box. A maximum limit could be placed on it, a certain number of years, for instance. We could say, for instance, that during the first three years a product is marketed, the tax rate would be at a certain percentage, and then after that period income would resume being taxed at the set rate. It would be harder for the company to change its production constantly. That is probably the best way of solving that problem.
You know, some countries like the Netherlands, rather than limiting this measure to patents, also apply it to products that were developed through research and development, without necessarily being patented. So a second way of solving the problem would be to broaden the measure's application.
For instance, in Canada, companies that invent a new product and ask for the scientific research and development credit for the two years during which workers and scientists developed the product could be eligible for the patent box.