Tax incentives such as intellectual property regimes provide for reduced taxation
of the income derived from research, development, and innovation related activities.
By doing so, they lower the overall tax burden from investing in certain qualified
intangible assets. This paper proposes a methodology to build indicators comparing
the effect of income-based tax incentives for R&D and innovation on firms’ incentives
to make R&D intangible investments. It provides insights into how such incentives
affect firms’ decisions on whether, where and how much to invest in R&D intangibles.
These indicators are used to illustrate the extent to which these tax incentives may
create potential distortions to firms’ investment, protection and commercialisation
decisions. The model is further developed to account for the design changes to such
tax incentives introduced by the OECD/G20 Base Erosion and Profit Shifting minimum