The OECD has developed a detailed database on R&D tax incentives provided by governments to encourage business investment in research and development. This database tracks the key design features and costs of R&D tax incentives across OECD and partner countries based on annual surveys of national experts. The surveys find that most countries offer tax credits or allowances for R&D expenditures, with volume-based tax credits being the most common form of support. Analysis of the data shows that R&D tax incentives have increased in importance relative to direct government funding of business R&D in many countries since 2000.

1. MEASURING R&D TAX INCENTIVES
A comprehensive overview of government funding of business R&D
Directorate for Science, Technology and Innovation www.oecd.org/sti
OECD measurement of R&D tax incentives
 Part of long term strategy to capture the role of government policies in
R&D and innovation more broadly.
 Experience of 6 data and information collections (2007-2016)
 First guildelines on the measurement of R&D tax incentives – 2015
edition OECD Frascati Manual (http://oe.cd/frascati - Chp. 13)
 OECD Data and Statistics on R&D Tax Incentives
http://www.oecd.org/sti/RDTaxIncentives-Data-Statistics-Scoreboard.pdf
Understand how
schemes are
designed
Understand how
much is dedicated to
R&D tax support
Incorporate into
measurement
methodology (Frascati
Manual 2015)
Data and indicators
provide basis for
analysis of impacts
Codify
and
compare
across
countries
Please visit this page for more information: http://oe.cd/rdtax Contact us at: RDTaxStatsContact@oecd.org
The OECD has developed a detailed database on R&D tax incentives with the latest
information provided by national experts on the cost and key design features of R&D
tax incentives in the annual OECD R&D tax incentive survey.
Design of R&D tax incentive relief across OECD and partner economies, 2015
Eligible expenditures within scope of tax relief
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.
Sources: R&D Tax Incentives, http://oe.cd/rdtax; July 2015
R&D
labour
Subcontracted,
collaborative
R&D
Materials Overhead Equipment Intangibles Buildings
and land
Depreciation
Representative
(median) OECD+
tax incentive
   
25
14
19
33
9
8
27
13
4
16
8
8
Refundability of unused credits
(payable credit)
Carry-over provision
Thresholds/Ceiling
Preferential treatment of
SMEs/young firms
No Yes
Refundability of unused
credits (payable credit)
Carry-over provision
Threshold/Ceiling
Preferential treatment of
SMEs/young firms
All enterprises SMEs only Refund wage system
Indefinite Limited (mean: 8 yrs.; median: 5 yrs) Not applicable
Number of schemes
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.
Implied tax subsidy rates on R&D expenditures, 2015
1-B-Index, by firm size and profit scenario
Note: For more information on calculation of the B-index, see http://www.oecd.org/sti/b-index.pdf
Sources: R&D Tax Incentives, http://oe.cd/rdtax;, July 2015.
- 0.1
0.0
0.1
0.2
0.3
0.4
0.5
Large, profitable firm SME, profitable firm Large, loss-making firm SME, loss-making firm
1-B index
Since 2000 , several OECD countries such as France, Japan, the Netherlands and the
United Kingdom have increased their reliance on R&D tax incentives as a mechanism for
supporting business R&D, sometimes displacing direct forms of support. However, this trend
has not been uniform. The relative importance of tax incentives declined briefly during the crisis
in many economies, reflecting the demand-led nature of tax relief and its dependence on profits.
Trends in government tax incentive and direct support for business R&D, 2000-14
Tax support as a percentage of total (direct and tax) government support for business R&D, selected countries
Sources: R&D Tax Incentives, http://oe.cd/rdtax; Main Science and Technology Indicators, http://oe.cd/msti, July 2016
0
10
20
30
40
50
60
70
80
90
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%
Australia Canada France Japan
Korea Netherlands United Kingdom United States
Government funding of business R&D seeks to encourage companies to invest in
R&D and raise the level of business R&D investment. There is a sizeable correlation
between R&D intensity in the business sector and total government support for
business R&D can be observed across OECD countries and partner economies, with
some notable exceptions, however. Germany and Finland, for instance, have relatively
high business R&D intensity compared to the degree of public support. This correlation,
while not necessarily implying a causal relationship, provides a first indication of the
possible impact of government funding on business R&D.
Business R&D (BERD) intensity and government support for R&D, 2014
As a percentage of GDP
Sources: R&D Tax Incentives, http://oe.cd/rdtax; Main Science and Technology Indicators, http://oe.cd/msti, July 2016
USA
CHN FRA
JPN
KOR
GBR
CAN
AUS
NLD
BRA
BEL
IRL
RUS
AUT
TUR
HUN
ESP
PRT
ZAF
NOR CZE
DNK
GRC
SVN
CHL
FIN
ISL
ITA
LVA
SVK
EST
DEU
MEX
NZL
CHE
ISR
POL
SWE
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45
BERD,as%ofGDP
Total government support (direct and tax) to business R&D, as % of GDP
Volume of tax support to business R&D, Millions USD PPP, 2014
USD 75 million USD 250 million USD 2 500 millionNo incentive No data available
x
x
x
Volume of tax support to business R&D, Millions USD PPP, 2014
USD 75 million USD 250 million USD 2 500 millionNo incentive No data availablex
Volume of tax support to business R&D, Millions USD PPP, 2014
USD 75 million USD 250 million USD 2 500 millionNo incentive No data available
x
x
MicroBERD
The OECD has launched a new micro-data project based on a “distributed”
approach to empirical analysis of confidential micro-data. The project investigates and
models the incidence and impact of public support for business R&D in collaboration
with national experts with access to R&D and public support micro-data. This approach
facilitates a co-ordinated statistical analysis of the impact of tax incenitve design
features and their interaction with direct forms of public R&D funding by exploiting
variation in support within and across countries. This project is partly funded by the
European Union's Horizon 2020 Programme.
Find out more on the impact of R&D tax incentives:
Appelt, S., M. Bajgar, C. Criscuolo and F. Galindo-Rueda (2016), "R&D tax incentives:
Evidence on design, incidence and impacts", OECD Science, Technology and Industry
Policy Papers, No. 32, OECD Publishing, Paris, http://dx.doi.org/10.1787/5jlr8fldqk7j-en
Confidential business
data in participating
countries
Non-
confidential
harmonized
output
Statistical code
run on microdata
at local premises
R&D microdata
+ Corporate tax data
+ R&D grant/loan data
+ Business register data
+ Patent data
+ Innovation data
R&D tax incentives have become a key policy instrument in several OECD countries and
partner economies to encourage firms to invest in R&D. As of 2015, 28 out of 34 OECD
countries and a number of major non-OECD economies give preferential tax treatment to
business R&D expenditures. R&D tax incentives may apply to corporation taxes, payroll
withholding tax or social security contributions (SSC) in the form of credits or enhanced
allowances applicable on the volume of R&D expenditure undertaken. Some countries target
tax relief to R&D expenditures over and above of a pre-defined baseline amount. Such
incentives are commonly described as “incremental”. In 2015, volume-based tax credits
represent the most frequently-used form of tax relief across OECD and partner economies.
Types of tax relief schemes used in OECD and other major economies
Number of schemes
Note: There are some countries with more than one scheme.
Sources: R&D Tax Incentives, http://oe.cd/rdtax; Main Science and Technology Indicators, http://oe.cd/msti, July 2016
16
4
3
12
3
8
Volume-based tax credit
Incremental tax credit
Hybrid tax credit
Volume-based tax allowance
Hybrid tax allowance
PWTC & SSC exemption
New estimates of the cost of R&D tax incentives have been combined with data on direct
R&D funding (R&D grants and purchases), as reported by firms, to provide a more complete
picture of government efforts to promote business R&D. As of 2014, approximately 6.7% 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
support has generally increased relative to various forms of direct funding from 2006 to 2014.
Direct government funding of business R&D and tax incentives for R&D, 2014
As a percentage of GDP
Sources: R&D Tax Incentives, http://oe.cd/rdtax; Main Science and Technology Indicators, http://oe.cd/msti, July 2016
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
% Indirect government support through tax incentives Direct government funding of BERD Data on tax incentive support not available
Indirect government support to business
R&D, 2006 or nearest year, where available
OECD measurement of R&D tax incentives
Design of R&D tax incentives
Impact of R&D tax incentives
Cost of R&D tax incentives