Report

Teaser, summary, work performed and final results

Periodic Reporting for period 2 - TAX4INNO (OECD Study on the Incidence and Impact of Tax Support for Research and Innovation)

Teaser

New indicators and empirical policy analysis can contribute to the coordination and increased focus of individual country policy efforts to obtain the desired impact on growth, jobs and prosperity through research and innovation policies. In recognising the role of innovation...

Summary

New indicators and empirical policy analysis can contribute to the coordination and increased focus of individual country policy efforts to obtain the desired impact on growth, jobs and prosperity through research and innovation policies. In recognising the role of innovation in tackling 21st century challenges, this project implements the goals of the Horizon 2020 Work Programme “Europe in a Changing World: inclusive, innovative and reflective societies” by contributing new research tools and evidence on the role of public support measures as an instrument for improved innovation and socio-economic outcomes in society.

This project plays a key role in monitoring and assessing research and innovation policies in Europe and beyond. Its focus is on R&D tax incentives, which are admittedly the most “expensive” single type of policy instrument used to provide financial support for R&D activities in business enterprises across a majority of OECD and EU countries. The report presents a picture of the state of play of the project one year and half since its formal commencement in January 2016.

This project aims to:
(1) Provide new comprehensive evidence on the incidence and design of R&I tax incentives, building internationally comparable evidence on the size and nature of incentives provided by governments to support R&D and innovation through their tax systems;
(2) Deliver new evidence on the impact of R&I tax incentives, deepening our understanding of the impacts of R&D tax incentives on business innovation and economic performance, through within- and cross-country econometric micro-data analysis; and
(3) Foster knowledge sharing on the incidence, design and analysis of impact of R&D tax incentives.

Work performed

(1) Provide new comprehensive evidence on the incidence and design of R&I tax incentives.

Under this objective, the project has effectively extended:
- the range of countries for which evidence is available over the two data collections carried out up to date - 46 countries are now within scope.
- the temporal scope of evidence - a number of recent outputs make it possible to have a more historical perspective on policy developments in this area across most countries
- the quality of evidence available, by effectively cross validating and updating information for greater accuracy, making effective use of the expert network built through this project to ensure great comparability
- the scope of quantified information, by extending the extent to which indicators reflect complex support patterns in different countries and render them comparable

(2) Deliver new evidence on the impact of R&I tax incentives

A major review of the evidence on impacts has been released at the very beginning of this project and provides the OECD reference document in this subject.

http://www.oecd-ilibrary.org/science-and-technology/r-d-tax-incentives-evidence-on-design-incidence-and-impacts_5jlr8fldqk7j-en

Original new work on the analysis of the impact of R&D tax incentives is progressively building on evidence development work being carried out across the various workstreams. The project is at this stage finalising the inputs required for such a distributed, multi-country analysis.

(3) Foster knowledge sharing

Knowledge sharing is pursued within this project within expert communities with an interest on different dimensions of the subject, particularly policy makers, government statisticians and analysts.

The following activities have contributed to meeting the project’s interim objectives for knowledge sharing:

- One expert workshop on the evidence on R&D tax incentives, with wide participation from STI and tax policy and statistics communities
- 2 expert workshops on R&D microdata analysis
- Setting up community spaces for the two experts communities targeted in this project (R&D tax incentives and R&D microdata analysis)
- Several presentations to OECD policy committees as well as one presentation to European Commission officials in Brussels.
- Comprehensive publication of project outputs in a streamlined OECD reference website - http://oe.cd/rdtax
- Country focus - through the release of country-specific notes on R&D tax incentives
- Active twitter campaign of key outputs, coordinated across the OECD STI Directorate and the EU DG RTD.
- Successful submission of papers to academic and policy conferences.

Final results

The actions in this project contribute to the following impacts:

• Promote better understanding about the incidence and design on R&D tax incentives, promoting a better informed debate about their prevalence and use.

• Generate new insights, in a multi-country setting, about the impact of R&D tax relief in the context of its design of support schemes, other innovation support policies and idiosyncratic country features.

• Reduce the cost and enhance the quality of collection and analysis of data on R&D tax incentives.

• Demonstrate the potential of micro-data infrastructures and analysis to address innovation policy relevant questions, and help countries develop their agendas for enhancing their data and analysis strategies.

The dissemination activities undertaken within this project contribute to ensure that the findings from this work are readily communicated to and understood by policy makers from a wide pool of countries with influence on policy decision making. By embedding this project in the work programme of two OECD committees, this project maximises the scope for increasing its impact on policy makers. The evidence from this project, even at this incipient stage, is being reported as contributing to an improvement in the quality of policy discussions and decisions in this area. These should ultimate impact on improved innovation and economic outcomes as well as improved governance and use of public funds.

Website & more info

More info: http://oe.cd/rdtax.