Measuring Tax Support for R&D and Innovation

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Highlights | Indicators | Measurement

In addition to direct support measures such as grants, governments worldwide increasingly rely on tax incentives to promote business R&D and encourage innovation and economic growth. Since 2007, the OECD has been developing measurement and analysis methodologies to provide qualitative and statistical evidence on the use, cost and impacts of R&D tax incentives.

Latest news: On 9 December 2021 the OECD released the 2021 edition of its R&D Tax Incentives database, accompanied by a series of R&D tax incentive country profiles and the OECD R&D tax incentives database report. These updates provide the most up-to-date information on the role of R&D tax incentives in the innovation policy mix across 38 OECD countries and 11 partner economies, showcasing indicators and policy design features about expenditure-based R&D tax incentives, based on data collected from national officials through the 2021 OECD R&D tax incentives survey.

Direct government funding and tax support for business R&D, 2019
As a percentage of GDP

Source: OECD R&D Tax Incentives Database, December 2021 | Data and notes (.xlsx)

The 2021 edition of the OECD R&D tax incentive country profiles provides the most up-to-date internationally comparable information on the design and cost of R&D tax incentives, including policy responses to the COVID-19 crisis among other recent policy developments. Drawing on the latest indicators from the OECD R&D Tax Incentives database, the extended profiles highlight recent and long-term trends in the generosity, cost and uptake of R&D tax relief and provide insights into the distribution of R&D tax relief recipients and government tax relief for R&D by firm size and industry.

The 2021 OECD R&D tax incentives database report documents the most recent latest changes in the availability and design of R&D tax incentives and describes the latest OECD indicators of implied R&D tax subsidy rates and government tax relief for R&D expenditure (GTARD). These two complementary indicators facilitate a better and integrated view of government support for business R&D across countries and time. In addition, this report includes some more experimental indicators and novel information on:

Special, temporary or emergency tax relief provision for R&D in specific priority areas such as green or energy related R&D, collected for the first time in 2021;
Firms’ possibility to trade or exchange R&D tax benefits with third parties or use them as a security, collected for the first time in 2021;
The number of R&D tax relief beneficiaries and qualifying business R&D expenditures across countries and over time;
The distribution of GTARD by economic ownership (foreign-controlled affiliates and domestic enterprises with multinational presence) and across more detailed industry sectors, collected for the first time in 2021.

COUNTRY PROFILES - 2021 edition (released December 2021)

Click here for general and country-specific notes on the B-index time-series estimates contained in the 2021 edition of OECD R&D tax incentive country profiles.

information on the Design and scope of R&D tax incentives

R&D tax incentives in OECD and partner economies, summary overview - 2021 edition
OECD Compendium of Information on R&D Tax Incentives - 2020 edition (2021 edition forthcoming January 2022)
Eligibility of current and capital expenditure for R&D tax relief - 2021 edition

microBeRD: an OECD study on the impact of R&D tax incentives

The OECD is working on a micro-data project which applies a “distributed” approach to the empirical analysis of micro-data. The OECD microBeRD project project investigates and models the incidence and impact of public support for business R&D in collaboration with national experts with access to confidential R&D and public support micro-data. This approach facilitates a co-ordinated statistical analysis of the impact of tax relief design features and their interaction with direct forms of public R&D funding by exploiting variation in support within and across countries.

The final report with the results from the first phase of the microBeRD project (2016-19) was launched at a joint event with the European Commission in October 2020, organised as part of the 2020 EC-OECD Innovation and growth webinar series. Find out more about the event and watch the replay.

OECD publications, working papers and policy papers on R&D tax incentives