2013 Global Survey of R&D Tax Incentives
A significant number of countries now offer the critical operational pre-requisites for successfully conducting effective research and development (R&D), i.e., access to growing markets/customer base, access to talent, intellectual property protection, stable economy/government and information technology infra-structure. Accordingly, many countries are promoting optimization of R&D operations including relocation as part of their innovation-led economic development strategies. R&D tax incentives are an important component of these strategies.
Countries offering R&D tax incentives are often regarded as a favorable location for internationally-mobile R&D. When efficiently allocated, companies can effectively leverage their global R&D infrastructure resulting in the development of valuable intellectual properties.
R&D incentives vary by country with regard to the following “key” considerations:
- Computational mechanics;
- The levels of benefits available; and
- The certainty of realizing an economic benefit from the tax incentive.
Although the basic definition of “research and development” is similar across many countries, distinctions exist within sovereign laws. Some countries offer particularly lucrative incentives, subject to few restrictions on the location of the qualified research activity, funding of R&D, ownership of IP, etc.; while others offer basic incentives with significant limitations, including eligible industries, qualified costs and applications procedures. Most research incentives are designed to encourage companies to maintain a certain level of R&D, with additional incentives for increased research spending. A few regimes offer tax benefits for capital investments in R&D, while most offer incentives for operational costs, i.e., wages, supplies and contractor fees. Moreover, many countries offer enhanced tax incentives for startup companies.
This global survey summarizes and compares R&D tax incentives available in the countries typically considered as viable locations for conducting R&D.
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