Portugal gives most tax breaks for R&D, study shows
By Brian Beary in Washington | Tuesday 24 July 2012
Of the 20 EU countries studied, Portugal gives the most generous tax incentives to companies to invest in research and development (R&D), a new report
(1) from a Washington-based pro-innovation think tank shows. Portugal ranked second among the 42 advanced and emerging economies covered in the study for R&D tax breaks that are given to small and medium-sized enterprises (SMEs), with only India ranked higher. Spain, France, Denmark and Hungary were also ranked in the top ten. At the other end, Germany was ranked last as it gives no tax incentives to promote R&D, while Finland, Poland, Luxembourg, Slovakia and Sweden were also ranked in the bottom tier.
According to the study’s authors, The Information Technology and Innovation Foundation (ITIF), “almost all scholarly studies conducted since the early 1990s find R&D tax incentives to be both effective and efficient”. Updating 2009 data from the OECD and adding four new countries - Indonesia, Malaysia, Slovenia and Taiwan - ITIF developed an index for assessing the generosity of countries’ R&D tax incentives, such as tax credits, tax deductions and tax holidays and reductions. The 20 EU countries it assessed are fairly evenly dispersed among the top, middle and bottom in both sets of rankings - one for SMEs and one for large firms. The United States received a disappointing 27th ranking out of 42 countries, having slipped five places since 2007. Of the emerging economies, while India came in top place, and Brazil and Malaysia feature in the top ten, China and Russia were placed toward the middle of the rankings, while Indonesia placed in the bottom ten. The study also notes that since 2007, “many nations, even those with national budget challenges, have significantly expanded their R&D tax incentives,” citing France, Italy, Denmark and Portugal as examples.(1) The report is available at www2.itif.org/2012-were-27-b-index-tax.pdf