R&D TAX INCENTIVE SUPPORT: Canada - OECD.org

1 downloads 118 Views 2MB Size Report
R&D TAX INCENTIVE SUPPORT: Canada. Public support for business R&D: the mix of direct funding and tax relief. Fi
R&D TAX INCENTIVE SUPPORT: Canada 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 %

Indirect government support through tax incentives

Direct government funding of BERD

Data on tax incentive support not available

0.45 0.40

Indirect government support to business R&D, 2006 (or nearest year, where available)

0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00

12





 

Tax Incentive Support for Business R&D in OECD Countries – Canada

Trends in government support for business R&D

Figure 2. Direct funding of business R&D and tax incentives3 for R&D, Canada, 2000-13

    

 

Tax Incentive Support for Business R&D in OECD Countries – Canada

Design of R&D tax incentive support

Figure 3.1. R&D tax incentive schemes: Canada compared to OECD+ economies, 2015 Features of expenditure-based R&D tax incentive provisions CANADA Instrument: volume-based (SR&ED) investment tax credit Tax credit rate:6 35% CCPCs (up to CAD 3 million), 15% large enterprises and CCPCs (above expenditure limit) Corporation income tax (CIT) rate:7 26.70%, 15.19% (CCPC) (non-targeted CIT: gradually reduced from 42.4% in 2000 to 34.2% in 2005, 29.4% in 2010 and 26.3% in 2013)

Types of tax relief schemes used in OECD and other major economies Number of schemes

CAN

Note: Instrument used by Canada highlighted in red. There are some countries with more than one scheme.

Tax Incentive Support for Business R&D in OECD Countries – Canada

 



Figure 3.2. Design of R&D tax incentives: Canada8 compared to OECD+ economies, 2015 Eligible expenditures within scope of tax relief Median9 OECD+ tax incentive

SR&ED investment tax credit

R&D labour





Subcontracted, collaborative R&D





Materials





Overheads





Machinery and equipment Intangibles Buildings and land Depreciation

Number of schemes subject to relevant provisions Refundability of unused credits (payableRefundability credit)

Indefinite Carry-over Carry-over provision

Thresholds and ceilings Threshold/Ceiling

All enterprises

SMEs

9

4

25

14

Limited(mean: 8 yrs., median: 5 yrs.)

8

Refund wage system

8 Not applicable

16 (20 years)

19

8

27

Preferential of Specialtreatment treatment SMEs SMEs/young firms

33 No

13 Yes Number of schemes

Note: Instrument used by Canada highlighted in red. Some countries have more than one separately identified incentive scheme.

Tax Incentive Support for Business R&D in OECD Countries – Canada

Tax subsidy rates on business R&D expenditure

Figure 4. Implied tax subsidy rates on R&D expenditures11, 2015 B-Index country distribution, by firm size and profit scenario 0.50 FRA

FRA

0.40

1 minus B-index

ESP CAN

0.30

ESP

CAN

0.20 CAN CAN

0.10

0.00

NZL

NZL

ITA JPN NZL ITA, JPN, NZL

ITA NZL ITA, NZL

-0.10 Large/Profitable

SME/Profitable

Large/Loss-making

12

SME/Loss-making

Tax Incentive Support for Business R&D in OECD Countries – Canada

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 Volume of tax support to business R&D, Millions USD PPP, 2013 No incentive x No data available

USD 75 million

USD 2 500 million

USD 250 million

4.0

x JPN

3.0

BERD, as % of GDP

KOR

ISR

3.5

2.5

FIN

SWE

CHE

2.0

DEU

0.5 0.0

AUS EST ESP NOR CZE

ITA NZL SVK POL BRA x TUR MEX ZAF GRC CHL

0.00

0.05

0.10

FRA

ISL IRL

NLD

1.0

SVN AUT BEL

CHN

1.5

USA

DNK

HUN

CAN

RUS

GBR

PRT

0.15

0.20

0.25

0.30

0.35

0.40

0.45

Total government support (direct and tax) to business R&D, as % of GDP 12

Tax Incentive Support for Business R&D in OECD Countries – Canada

Figure 6. BERD and public support for business R&D, Canada, 2000-2013 As a percentage of market-sector GVA

Tax Incentive Support for Business R&D in OECD Countries – Canada