R&D Tax Incentives: Evidence on design, incidence and impacts

Abstract

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities or third party. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Latvia was not an OECD member country at the time of preparation of this publication. Accordingly, Latvia does not appear in the list of OECD member countries and is not included in the zone aggregates.

ICT investments in OECD countries and partner economies

“…In contrast, direct grant support is more suitable for supporting longer-term, high-risk research and for targeting specific areas that generate public goods, e.g. health or defence, or that have high potential for spillovers (Appelt et al, 2016).…”

Increasing the benefits of Slovakia’s integration in global value chains

“…The effectiveness of these tax incentives will, however, depend on their design and the quality of their implementation. International experience shows that to be effective such policies must include rigorous ex ante and ex post evaluation systems (Appelt et al, 2016). This is all the more necessary in Slovakia as the risk of misuse of this public aid cannot be underestimated given the tax evasion problems that the country faces (OECD, 2017b).…”

Structural reforms to boost growth and living standards in Argentina

“…Besides easing the procedures for registering patents and trademarks, on which progress has been made through a recent administrative reform, a key tool to foster R&D innovation by firms is the R&D tax credit. This tax credit aims at alleviating difficulties by firms to fully appropriate the returns to their investment and to find external finance, in particular for small or young firms (Appelt et al, 2016). Argentina has an R&D tax credit based on a competitive allocation system with a budget of 0.002 % of GDP.…”

“…Hence, the more innovative young firms are less likely to benefit from the tax credit under its current design. International evidence show that to support these type of firms, the tax credit should include provisions such as the possibility for tax credits to be converted into cash refunds or into reductions in social security and payroll taxes or include carry forward provisions (Appelt et al, 2016).…”