R&D Tax Incentives, like we have in Australia, are intended to drive innovation, and thus productivity and value in the global economy. By reducing the tax costs of those investments, policymakers believe that companies have an added reason to take risks to perform innovation that they may not typically take. However, not every country has tax tools used to incentivize spending on R&D and develop patented innovations, and of those that do, not all are the same. A recent Tax Foundation report looked into the countries within the Organisation for Economic Co-operation and Development (OECD), evaluating their policies on R&D. It found that, especially from an international perspective, broadly neutral tax policies are better for providing a general environment that is supportive of innovation than R&D tax incentives and subsidies or patent box incentives.
The Tax Foundation paper noted that:
The report recommended: