oecd data and statistics on r&d tax incentives · for more information oecd science, technology...
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OECD SCIENCE, TECHNOLOGY AND INDUSTRY SCOREBOARD 2015
OECD Data and Statistics on R&D Tax Incentives
Governments worldwide adopt various support instruments to promote business R&D. In
addition to providing grants and buying R&D services (“direct” support), many also provide fiscal
incentives. Tax incentives for business R&D expenditures include allowances and credits, as
well as other forms of advantageous tax treatment such as allowing for the accelerated
depreciation of R&D capital expenditures.
On a purchasing power parity basis, gross domestic expenditure on R&D (GERD) in the OECD
area amounted to USD 1.13 trillion in 2013, the equivalent of 2.4% of total OECD GDP.
Business R&D accounts for approximately 68% of total R&D performed in the OECD area.
In 2015, 28 of the 34 OECD countries and a number of non-OECD economies gave preferential
tax treatment to business R&D expenditures. This figure has been steadily rising over time. As
of 2013, approximately 6.9% of business R&D was directly funded by governments. R&D tax
incentives account for the equivalent of an additional 5.2% of public funding of business R&D.
Reliance on R&D tax incentives has generally increased relative to various forms of direct
support. A comparison of public support provided in 2013 and 2006 shows an increase in the
relative importance of tax incentives among 16 out of 28 countries for which data are available.
Korea, the Russian Federation and France provided the most combined support for business
R&D as a percentage of GDP in 2013, while the United States, France and China provided the
largest volumes of tax support. In relative terms, the largest amount of R&D tax support was
provided by the Netherlands – 87% as percentage of total government support – and Australia
and Canada with approximately 85%.
The combined value of this support in 2013, across the OECD and major economies (Brazil,
China, the Russian Federation and South Africa), was close to USD 50 billion, and amounted to
approximately USD 40 billion in the OECD area alone.
The design of R&D tax incentives influences the "expected" generosity of tax relief per
additional unit of R&D investment. Across OECD and partner economies providing tax relief,
there is a significant variation in tax subsidy rates for firms of different size and profitability. The
OECD median tax subsidy rate is estimated at 0.19 for profitable and of 0.13 for loss-making
SMEs, above the OECD median of 0.13 for large profitable firms and of 0.10 for large loss-
making enterprises. This result is attributable to the preferential tax treatment that currently only
12 out of OECD countries provide for SMEs or young firms vis-à-vis large firms.
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
Key features of R&D tax incentives and rationale
Features of expenditure-based R&D tax incentives
Box 1. Tax incentives for business R&D – expenditure and income based provisions
Tax incentives for business R&D
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
Figure 1. Design of R&D tax incentive relief across OECD and partner economies, 2015
Eligible expenditures within scope of tax relief
R&D
labour
Subcontracted,
collaborative
R&D
Materials Overhead Equipment Intangibles Buildings
and land Depreciation
Representative
(median) OECD+
tax incentive
Number of schemes subject to relevant provisions
Note: The “median OECD+ tax incentive” reflects the median characteristics of R&D tax incentive schemes available in OECD and partner economies (Brazil, China, Russian Federation and South Africa) as of July 2015. If the analysis is limited to OECD countries, the median “OECD tax incentive” further includes the cost of acquiring software, licences and IP rights as eligible R&D expenditure. Some countries have more than one separately identified incentive scheme.
Source: OECD, Measuring R&D Tax Incentives, www.oecd.org/sti/rd-tax-stats.htm, October 2015.
Number of schemes
Refundability of unused credits (payable credit)
Carry-over provision
Threshold/Ceiling
Preferential treatment of SMEs/young firms
Limited (mean: 8 yrs., median: 5 yrs.) Indefinite Not applicable
All enterprises SMEs only Refund wage system
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
Box 2. R&D tax incentives and R&D statistics
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
Table 1. Main features of R&D tax incentives provisions in selected OECD and non OECD countries, 2015
Expenditure-based R&D tax incentives
Corporate income tax
Social security/payroll
withholding tax R&D tax credit
R&D tax allowance Volume Incremental/hybrid
Taxable: Australia, Canada, Chile,
United Kingdom (large companies)
Non-taxable: Austria, Belgium
(incompatible with allowance),
Denmark (deficit only), France,
Iceland, Ireland, New Zealand
(deficit only), Norway, Hungary
Taxable: United States
(credit on fixed, indexed
base and incremental for
simplified credit)
Non-taxable: Italy (Legge
di Stabilità 2015), Japan,
Korea, Portugal, Spain
Non-taxable: Belgium, Brazil,
China, Czech Republic (hybrid),
Greece, Hungary, Netherlands,
Poland (R&D Centres), Russian
Federation, Slovenia, Slovak
Republic (hybrid and volume-
based), South Africa, Turkey
(hybrid), United Kingdom
Taxable: Belgium, France,
Netherlands, Hungary,
Russian Federation, Spain,
Sweden, Turkey
Treatment of excess claims
Refund
Australia (SMEs), Austria, Belgium
(after five years), Canada (SMEs),
Denmark, France (SMEs), Iceland,
Ireland, New Zealand, Norway,
United Kingdom (large companies)
Spain (reduced, payable
credit optional) United Kingdom (SMEs)
Automatic refund through
wage system
Carry-forward
Australia, Belgium, Canada, Chile,
France, Ireland
Korea, Portugal, Spain
(unreduced, non-payable
credit), United States
Belgium, China, Czech
Republic, Greece, Poland,
Netherlands, Russian
Federation, Slovenia, Slovak
republic, South Africa, Turkey,
United Kingdom
Not applicable
Enhanced tax credit/allowance rates or more favourable terms
SMEs
Australia, Canada, France, Norway
Italy (innovative start-ups),
Japan, Korea, Portugal
(start-ups)
United Kingdom
Belgium (young innovative
firms), France (JEI/JEU),
Netherlands (start-ups),
Spain (innovative SMEs)
Collaboration
France Italy, Iceland, Japan Hungary Belgium
Limitation of benefits
Threshold-dependent credit rates
Canada (SMEs), France Netherlands, Russian
Federation
Ceilings on amount of eligible R&D expenditure or value of R&D tax relief
R&D expenditure: Australia (floor
and cap), Canada (SMEs), Chile,
Denmark, Iceland, Norway
R&D tax relief: Hungary, New
Zealand (deficit only)
R&D expenditure: Italy
(floor), Portugal
(incremental)
R&D tax relief: Italy,
Japan, Korea (large firms),
Spain, United States
R&D tax relief: Hungary (R&D
collaboration), United Kingdom
R&D expenditure and R&D tax
relief: Slovak Republic (volume-
based tax allowance)
R&D expenditure: Hungary
R&D tax relief: France,
Sweden, Turkey (five year
limit)
Accelerated depreciation provisions for R&D capital
Belgium, Brazil, Chile, China, Denmark, France, Israel (non R&D specific), Poland, Russian Federation, Spain, United Kingdom
No expenditure-based R&D tax incentives
Estonia, Finland, Germany, Luxembourg, Mexico, Switzerland
Preferential tax treatment of income derived from R&D or other innovation activities
Belgium, China, France, Greece, Hungary, Ireland, Israel, Italy, Korea, Luxembourg, Netherlands, Portugal,
Russian Federation (Technology and Innovation Special Economic Zones), Spain, Switzerland (Canton of Nidwalden),
Turkey (Technology Development Zones), United Kingdom
Source: OECD, R&D Tax Incentives Database, www.oecd.org/sti/rd-tax-stats.htm, December 2015.
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
How much financial support do governments provide through R&D tax incentives?
Tax subsidy rates
Figure 2. Implied tax subsidy rates on R&D expenditures, 2015
1-B-Index, by firm size and profit scenario
Source: OECD STI Scoreboard 2015, based on OECD, R&D Tax Incentive Indicators, www.oecd.org/sti/rd-tax-stats.htm and Main Science and Technology Indicators, www.oecd.org/sti/msti.htm, June 2015.
Statlink: http://dx.doi.org/10.1787/888933274335
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
The value of R&D tax expenditures
Figure 3. Direct government funding of business R&D and tax incentives for R&D, 2013
As a percentage of GDP
Source: OECD STI Scoreboard 2015, based on OECD, R&D Tax Incentive Indicators, www.oecd.org/sti/rd-tax-stats.htm and Main Science and Technology Indicators, www.oecd.org/sti/msti.htm, June 2015.
Statlink: http://dx.doi.org/10.1787/888933274317
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
Trends in R&D tax support volumes
Figure 4. Trends in government tax incentive and direct support for business R&D, 2000-13
Tax support as a percentage of total (direct and tax) government support for business R&D, selected countries
Source: OECD STI Scoreboard 2015, based on OECD, R&D Tax Incentive Indicators, www.oecd.org/sti/rd-tax-stats.htm and Main Science and Technology Indicators, www.oecd.org/sti/msti.htm, June 2015.
Statlink: http://dx.doi.org/10.1787/888933273262
How to measure the cost of R&D tax incentives
Frascati Manual
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
Figure 5. Change in government support for business R&D through direct funding and tax incentives, 2006-13
As a percentage of total support, and annualised growth rates
Source: OECD STI Scoreboard 2015, based on OECD, R&D Tax Incentive Indicators, www.oecd.org/sti/rd-tax-stats.htm and Main Science and Technology Indicators, www.oecd.org/sti/msti.htm, June 2015.
Statlink: http://dx.doi.org/10.1787/888933274322
The relationship between government support for business R&D and R&D performance
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
Figure 6. Business R&D intensity and government support to business R&D, 2013
As a percentage of GDP
Source: OECD STI Scoreboard 2015, based on OECD, R&D Tax Incentive Indicators, www.oecd.org/sti/rd-tax-stats.htm and Main Science and Technology Indicators, www.oecd.org/sti/msti.htm, June 2015.
Statlink: http://dx.doi.org/10.1787/888933273275
Next steps and recommendations
How to read this figure
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives
References
OECD general policy recommendations on the use of R&D tax incentives
For more information
OECD Science, Technology and Industry Scoreboard 2015: R&D Tax Incentives