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Taxation of Knowledge-Based Capital Non-R&D Investments, Average Effective Tax Rates, Internal Vs. External KBC Development and Tax Limitations

This paper extends the tax analysis of knowledge-based capital (KBC) in several dimensions. The paper analyses non-R&D KBC: computer software, architectural and engineering designs, and economic competencies which account for over 70% of total KBC. The paper analyses the tax treatment of interna...

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Bibliographic Details
Main Author: Modica, Alessandro
Other Authors: Neubig, Thomas
Format: eBook
Language:English
Published: Paris OECD Publishing 2016
Series:OECD Taxation Working Papers
Subjects:
Taxation
Online Access:
Collection: OECD Books and Papers - Collection details see MPG.ReNa
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246 2 1 |a L'imposition du capital intellectuel : Investissements non liés à la R-D, taux moyens effectifs d'imposition, développement interne/externe du capital intellectuel et restrictions fiscales / Alessandro, Modica et Thomas, Neubig 
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520 |a This paper extends the tax analysis of knowledge-based capital (KBC) in several dimensions. The paper analyses non-R&D KBC: computer software, architectural and engineering designs, and economic competencies which account for over 70% of total KBC. The paper analyses the tax treatment of internally-developed KBC which is used in production by the developer versus KBC sold to third-party producers. The current tax rules generally favour internally-developed KBC, which disadvantages many SMEs and start-up companies specializing in innovation. The analysis reports two average effective tax rates (ETRs) depending on investors' considerations of their investment opportunities. When KBC is unique, earns excess returns due to market power, or involves financing-constraints, ETRs are high despite immediate expensing. The paper also analyses the effects of tax limitations, where many SMEs and start-up companies can't benefit from tax credits and deductions until having sufficient tax liability 

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