Taxation of knowledge-based capital : non-R&D investments, average effective tax rates, internal vs. external KBC development and tax limitations

Resource Information

The work Taxation of knowledge-based capital : non-R&D investments, average effective tax rates, internal vs. external KBC development and tax limitations represents a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation. This resource is a combination of several types including: Work, Language Material, Books.

Label

Taxation of knowledge-based capital : non-R&D investments, average effective tax rates, internal vs. external KBC development and tax limitations

Creator

• Modica, A
• Neubig, T.S

Subject

• SME
• carry-over
• OECD
• tax credit
• tax incentive
• effective tax rate
• R&D

Language

• eng
• eng

Summary

This paper extends the tax analysis of knowledge-based capital (KBC) in several dimensions. The paper analyses non-R&D KBC: computer software, architectural and engineering designs, and economic competencies which account for over 70% of total KBC. The paper analyses the tax treatment of internally-developed KBC which is used in production by the developer versus KBC sold to third-party producers. The current tax rules generally favour internally-developed KBC, which disadvantages many SMEs and start-up companies specializing in innovation. The analysis reports two average effective tax rates (ETRs) depending on investors' considerations of their investment opportunities. When KBC is unique, earns excess returns due to market power, or involves financing-constraints, ETRs are high despite immediate expensing. The paper also analyses the effects of tax limitations, where many SMEs and startup companies can't benefit from tax credits and deductions until having sufficient tax liability

Geographic coverage

International

Index

no index present

Language note

English

Literary form

non fiction

Series statement

OECD Taxation Working Papers

Series volume

no. 24