GOVERNMENT SUPPORT FOR BUSINESS R&D – R&D TAX INCENTIVES OECD STI Scoreboard 2013 (forthcoming 23 October 2013) Pre-release of indicators on R&D tax incentives on 10 October

There is a large variation in the level of direct R&D funding across countries 2 Government support of business R&D, 2011: direct funding (contracts and grants) As percentage of GDP Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013 But this only provides a partial picture of the total support provided by countries

Implied tax subsidy rates on R&D expenditures, 2013 Currently, many governments subsidise R&D through their tax system New OECD estimates of the value of tax support firms may receive for one € of R&D investment Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013

4 Several countries provide a more generous treatment for SMEs Extra subsidy provided to R&D in SMEs in France Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013 Implied tax subsidy rates on R&D expenditures, 2013

5 Tax subsidy varies if profits are too low – refunds and carryovers are sometimes offered Finland allows carry forward of incentives, but not full refund Canada and France allow full refund but only for SMEs Austria allows full refund Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013 Implied tax subsidy rates on R&D expenditures, 2013

Government support of business R&D, 2011: direct funding and tax incentive support 6 Share R&D tax support 50/70% Share R&D tax support 70-85% Some countries rely strongly on R&D tax incentive support As percentage of GDP Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013

Government support of business R&D, 2011: direct funding and R&D tax incentives 7 These estimates provide a more complete picture of government support… As percentage of GDP Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013

 Government support of business R&D, 2011: direct funding and R&D tax incentives… 8 … which leads to different international rankings As percentage of GDP Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013

 The economic crisis has slowed down the move towards more R&D tax incentives 9 What are the trends? Change in government support of business R&D through direct funding and tax incentives, Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013

 Correlation between total support – R&D intensity, but not necessarily causal  OECD estimates: an additional instrument to test impacts of support policies Business R&D intensity and government support to business R&D, Source: OECD STI Scoreboard 2013 – forthcoming 23 October 2013

11 For more information: OECD Science, Technology, Industry Scoreboard 2013 INNOVATION FOR GROWTH Release date: 23 October