Corporate effective tax rates for R&D The case of expenditure-based R&D tax incentives
R&D tax incentives have become a widely used policy tool to promote business R&D. How do they shape firms' incentives to invest in R&D? This paper contributes a methodology to construct forward-looking effective tax rates for an R&D investment that reflect the value of expenditu...
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Other Authors: | , |
Format: | eBook |
Language: | English |
Published: |
Paris
OECD Publishing
2021
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Series: | OECD Taxation Working Papers
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Subjects: | |
Online Access: | |
Collection: | OECD Books and Papers - Collection details see MPG.ReNa |
Summary: | R&D tax incentives have become a widely used policy tool to promote business R&D. How do they shape firms' incentives to invest in R&D? This paper contributes a methodology to construct forward-looking effective tax rates for an R&D investment that reflect the value of expenditure-based R&D tax incentives. The new OECD estimates cover 48 countries and consider the case of large profitable firms, accounting for the bulk of R&D in most economies. The results provide new insights into the generosity of R&D tax incentives from the perspective of firms that decide on whether or where to invest in R&D (extensive margin) and the level (intensive margin) of R&D investment. The generosity of the favourable tax treatment of R&D is shown to vary at the intensive and extensive margins, highlighting differences in countries' strategies to support R&D through the tax system |
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Physical Description: | 66 p |