Foreign experience of tax incentives for innovative activities
Abstract
This paper delves into the utilization and expansion of tax incentives for research and development (R&D) across various countries, examining the underlying reasons for their increasing prevalence and generosity.Despite some nations abstaining from such incentives due to perceived ineffectiveness, the global trend points towards a growing adoption and diversification of tax incentives aimed at spurring innovation.Through an analysis of international data and research, this study explores how changes in the global environment have fuelled the proliferation of R&D tax incentives.The paper highlights the key motivators for government intervention in R&D, including market failures that impede the private sector from fully capitalizing on new knowledge, the inherently risky nature of research activities, and the strategic importance of R&D in achieving national goals.Furthermore, the study addresses the varied approaches to tax incentives, such as direct and indirect support, and evaluates their impact and effectiveness in fostering scientific and technological advancement.The findings underscore the critical role of tax incentives in national innovation systems and the nuanced balance countries strive to achieve in implementing these fiscal tools to enhance competitiveness and sustainable economic growth.