r&d tax incentive support: japan - oecd · tax incentive support for business r&d in oecd...
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R&D TAX INCENTIVE SUPPORT: Japan
Public support for business R&D: the mix of direct funding and tax relief
Figure 1. Direct government funding of business R&D and tax incentives for R&D1, 2013 As a percentage of GDP
1 2
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)
Tax Incentive Support for Business R&D in OECD Countries – Japan
Trends in government support for business R&D
Figure 2. Direct funding of business R&D and tax incentives2 for R&D, Japan, 2000-13
Tax Incentive Support for Business R&D in OECD Countries – Japan
Design of R&D tax incentive support
Figure 3.1. R&D tax incentive schemes: Japan compared to OECD+ economies, 2015
Features of expenditure-based R&D tax incentive provisions
JAPAN
Instrument: (i) volume-based, (ii) incremental R&D tax credits
Tax credit rate: (i): 8-10%4 (large enterprise), 12% (SME); credit for special (collaborative) R&D: 20 or 30%;
(ii): 5-30%5 OR: high R&D intensity credit: 20%*(“R&D intensity”-10%)
Corporation income tax (CIT) rate:6 32.11% (40.9%, 39.5% and 36.99% as of 2000/-04/-13)
Types of tax relief schemes used in OECD and other major economies
Number of schemes
Note: Instruments (i and ii) used by Japan highlighted in red. There are some countries with more than one scheme.
JPN
Tax Incentive Support for Business R&D in OECD Countries – Japan
Figure 3.2. Design of R&D tax incentives: Japan10 compared to OECD+ economies, 2015
Eligible expenditures within scope of tax relief
Median
11OECD
+
tax incentive Volume-based
scheme Collaborative R&D scheme
Incremental scheme
High R&D intensity scheme
R&D labour
Subcontracted, collaborative R&D
Materials
Overhead
Machinery and equipment
Intangibles
Buildings and land
Depreciation
Number of schemes subject to relevant provisions
Note: Instruments used by Japan highlighted in red. Some countries have more than one separately identified incentive scheme.
25
14
19
33
9
8
27
13
4
16
8
8
Refundability
Carry-over
Thresholds and ceilings
Special treatment SMEs
No YesNumber of schemes
Refundability of unused credits (payable credit)
Carry-over provision
Threshold/Ceiling
Preferential treatment of SMEs/young firms
All enterprises SMEs Refund wage system
Limited(mean: 8 yrs., median: 5 yrs.) Indefinite Not applicable
Tax Incentive Support for Business R&D in OECD Countries – Japan
Tax subsidy rates on business R&D expenditure
Figure 4. Implied tax subsidy rates on R&D expenditures13, 2015 B-Index country distribution, by firm size and profit scenario
1 2
JPNJPN
JPNJPN
ESP
ESP
FRA FRA
ITA ITAJPNNZL NZL NZL NZL
-0.10
0.00
0.10
0.20
0.30
0.40
0.50
1 m
inu
s B
-ind
ex
Large/Profitable SME/Profitable Large/Loss-making SME/Loss-making
ITA, JPN, NZL ITA, NZL
JPN
Tax Incentive Support for Business R&D in OECD Countries – Japan
What is the impact of government support for business R&D?
Figure 5. Business R&D intensity and government support for business R&D, 2013
1 2
USA
CHN
FRA
JPN
KOR
CAN
GBR
AUS
NLD
BRA
BEL
RUS
TUR
AUT
ESP
IRL HUN
PRT
ZAF
CZE NOR
DNK
GRC
SVN
CHL
FIN
ITA
ISL
SVK
EST
DEU
MEX
NZL
SWE
CHE
ISR
POL
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
BE
RD
, as
% o
f GD
P
Total government support (direct and tax) to business R&D, as % of GDP
Volume of tax support to business R&D, Millions USD PPP, 2013
USD 75 million USD 250 million USD 2 500 million No incentive No data available
x
x
x
Tax Incentive Support for Business R&D in OECD Countries – Japan
Figure 6. BERD and public support for business R&D, Japan, 2000-2013 As a percentage of market-sector GVA
Tax Incentive Support for Business R&D in OECD Countries – Japan