Comparing R&D tax regimes : Australia, Canada, UK and US

Resource Information

The work Comparing R&D tax regimes : Australia, Canada, UK and US 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, Continuing Resources.

Label

Comparing R&D tax regimes : Australia, Canada, UK and US

Creator

• Bowler Smith, M

Subject

• R&D
• tax credit
• tax incentive

Language

eng

Summary

This article explores the definition, classification and categorisation of tax incentives, at a general level, and it compares how four global leaders target their R&D tax incentive regimes. The latter is an exercise in comparative tax law focusing on the R&D definition and the incentive's operational details. It observes that the R&D definition is used by all of the regimes as a gateway to the relief and to curtail the scope of the relief by restricting R&D to "new scientific knowledge", where the US interprets "new" to mean new to the entity, whereas the UK, Australia and Canada, interpret "new" to mean new to the world. Thus, the US regime arguably focuses on creating and sustaining the competitiveness of its domestic firms by subsidising "knowledge acquisition" rather than "knowledge creation". It also observes that: whilst the US and Canada subsidise incremental improvements in new scientific knowledge, the UK and Australia do not, insisting instead on "substantial advances"; only the US uses an incremental credit, which arguably serves as a means of limiting the cost of this tax expenditure to the US Treasury, particularly given the broad scope of its R&D definition: none of the regimes respond to the consensus on the need for specialisation, adopting as they do a broad-brush approach to subsidising technological innovation; and by focusing on experimentation or scientific method, all of the regimes leave out a large area of potentially innovative and productive commercial activity (that is, commercial product development using an iterative or "trial and error" methodology). The first part of the article considers the general nature of tax incentives, part two considers the way in which R&D is defined by each regime and part three outlines the operation of the regimes (what regimes are available according to what criteria)

Citation source

In: British tax review. - London. - (2017), no. 1 ; p. 34-59

Geographic coverage

• North America
• European Union
• Europe

Language note

English