R&D TAX INCENTIVE SUPPORT: Japan. Public support for business R&D: the mix of direct funding and tax relief. Fig
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 %
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 – 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 4
Tax credit rate: (i): 8-10% (large enterprise), 12% (SME); credit for special (collaborative) R&D: 20 or 30%; 5 (ii): 5-30% OR: high R&D intensity credit: 20%*(“R&D intensity”-10%) 6
Corporation income tax (CIT) rate: 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
JPN
Note: Instruments (i and ii) used by Japan highlighted in red. There are some countries with more than one scheme.
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 Median11OECD+ 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 All enterprises
Refundability of unused Refundability credits (payable credit) Carry-over provision Carry-over
Threshold/Ceiling Thresholds and ceilings
25
9
SMEs
4
Indefinite
Limited(mean: 8 yrs., median: 5 yrs.)
8
16
14
19
Refund wage system
8 Not applicable
8
27
Preferential treatment of SMEs Special treatment SMEs/young firms
33 No
13 Yes Number of schemes
Note: Instruments used by Japan highlighted in red. Some countries have more than one separately identified incentive scheme.
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 0.50 FRA
FRA
0.40
1 minus B-index
ESP
0.30
ESP
0.20 JPN
0.10
0.00
JPN
NZL
NZL
ITA JPN NZL JPN ITA, JPN, NZL
JPN ITA NZL JPN 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 – 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 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 – 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
