2013年-世界发展银行全球_Tax_Incentives_for_Research_and_Development_18页_982kb

Summary of "Tax Incentives for Research and Development"

Core Content

This document explores the use of tax incentives for R&D as a policy tool to stimulate private sector investment in research and development. It outlines the evolution of such policies, their economic rationale, key characteristics, measurement methods, and challenges in implementation. The authors emphasize the importance of policy design, administrative efficiency, and data quality in the effective use of tax incentives to promote innovation and R&D activities.

Main Points and Key Information

1. Rise in R&D Tax Incentives Globally

• In the 1980s, only a few countries (e.g., Canada, US, France) had R&D tax incentives.
• By the 2000s, many developed and developing countries adopted such schemes.
• The OECD reported an increase from 18 to 26 countries offering R&D tax breaks between 2004 and 2011.
• Middle-income countries (MICs) like Croatia, Turkey, Brazil, and India have also introduced or reformed R&D tax incentives.

2. Economic Rationale

• R&D is considered a public good with positive externalities, leading to underinvestment by firms.
• Arrow (1962) noted that social returns from R&D exceed private returns due to spillovers and imitation.
• Tax breaks help lower the marginal cost of R&D investment, making it more attractive for firms.

3. Types of R&D Tax Incentives

• Tax credits, enhanced deductions, special depreciation allowances, loss carrybacks, and carryforwards are common mechanisms.
• Tax credits allow firms to directly reduce their tax liability based on a proportion of R&D expenditure.
• Enhanced deductions allow firms to deduct more than the actual R&D costs from taxable income.
• Depreciation allowances enable firms to treat R&D expenditures as capital goods, reducing tax burden.

4. Policy Design Variations

• There are two main types of schemes: volume-based and incremental.
• Volume-based schemes apply to the total R&D expenditure, while incremental schemes apply to increments above a base level.
• SMEs often benefit more from incremental schemes, as they are more likely to experience fluctuations in R&D investment.
• SMEs may also be more affected by administrative burdens due to limited resources.

5. Measurement and Evaluation of Tax Incentives

• Foregone tax revenue is a common metric used to assess the cost of R&D tax incentives.
• B-index measures the minimum before-tax income required for a firm to find R&D profitable, considering tax rates and incentives.
• Structural models link tax incentives to user cost of R&D capital, which influences R&D intensity.
• These models are based on profit maximization and investment behavior frameworks.

6. Administrative Challenges

• Verification of R&D eligibility is complex for tax authorities.
• SMEs face significant red tape and compliance costs due to the procedural requirements of claiming incentives.
• Simplification of procedures and capacity building by tax authorities are essential to reduce administrative burdens.

7. International Examples

• The UK has a volume-based R&D tax relief system with deductions and credits.
• France moved from incremental to volume-based schemes, increasing generosity.
• Ireland allows cash refunds for loss-making firms and carrybacks of credits.
• Canada and Spain offer mixed incentives combining tax credits, deductions, and depreciation.

8. Limitations and Considerations

• Direct subsidies can be more effective than tax incentives in some countries, such as Sweden and Germany.
• Data quality is a major issue in assessing the effectiveness of R&D tax incentives.
• Counterfactual analysis is difficult due to the lack of observable baseline data.
• Randomized trials are not feasible for tax policies due to market distortions and unfair competition.

Conclusion

R&D tax incentives are a widely used fiscal policy tool to encourage private investment in innovation. While they can be effective, their design, implementation, and evaluation are complex. A clear and simple design is crucial to ensure take-up and efficiency. SMEs often benefit more from incremental schemes, but they also face higher administrative costs. Tax credits and enhanced deductions are the most common mechanisms, and their generosity varies across countries. Data limitations and measurement challenges remain significant barriers to policy evaluation.

Additional Information

Data Sources

• OECD Tax Database
• Corporate income tax tables
• ERAWATCH and Deloitte 2012 Global Survey of R&D Tax Incentives

Useful References

• Arrow, K. J. (1962): The economic rationale for R&D incentives
• Howe, T. & McFetridge, C. (1976): Profit maximization framework for R&D investment
• David, P. A., Hall, B. H., & Toole, J. J. (2000): Innovation possibility set
• Hall & Jorgenson (1967): Structural models for investment behavior

Annexes

• Annex I: B-index for cross-country comparison of R&D tax incentive schemes
• Annex II: User cost of R&D capital calculation

Figures and Tables

Figure 1: Marginal Cost and Return on Performing R&D to the Private Sector

• Illustrates how R&D tax credits reduce the marginal cost of R&D, shifting the cost curve outward.

Figure 2: Value of Tax Incentive in Terms of Foregone Tax Revenues (2004–2008)

• Shows the real increase in R&D support through tax incentives across several countries.

Figure 3: Value of Incentive in Terms of Cost to the Government

• Reflects the government cost of implementing R&D tax incentives.

Table 1: Examples of R&D Tax Incentive Systems

• Provides country-specific details on R&D tax incentives, including:
  • Main corporate tax rates
  • Eligible expenditures
  • Enhanced deductions and tax credits
  • Depreciation allowances and carryforward/refund policies