The Study of Research and Development Tax Incentives
Date Issued
2008
Date
2008
Author(s)
Chen, Shu-Chien
Abstract
Research and Development (R&D) has a positive externality to the whole society. It is also beneficial to economical growth. Therefore, it is justified that the government interfere the market by means of encouraging R&D. R&D tax incentive is one kind of policy tool.&D is an abstract term and its core concept is “innovation”. How to establish the definitions and categories of R&D is difficult. Innovation has high risk to fail and costs much, thus an enterprise may reluctant to conduct R&D activities. It is the spill-over effect of R&D that benefits the whole society. In the long term, R&D is beneficial to both the whole society and individual enterprises. But in the short term, one single enterprise lacks motivations to invest in R&D because of its high risk and positive externality. Tax incentives are encouraging measures that utilize tax benefit to induce people conduct some activities. It sacrifices the principle of equality in the Constitution to some degree in order to some policy goals. In order to Promote R&D to boost economical growth, it is sufficiently justified to introduce tax incentives. It is also reflected in Statute for Encouragement of Investment, Statute for Upgrading Industries, and the amendment in discussion.owever, during the 30-years period of introducing R&D tax incentives, many problems appear: tax arbitrage, overly beneficial incentives, lack of certainty in laws and regulations. Those are important issues for tax reforms. In order to understand the introduction of R&D tax incentives thoroughly, this essay collates definitions and categories of R&D, the chronic changes of laws and regulations, controversial issues in judicial practice, comparative foreign legal systems. We can investigate the why the causes of problems, and provide possible solutions and suggestions for legal reform in tax incentives
Subjects
R&D
tax incentives
economical development
Statute for Encouragement of Investment
Statute for Upgrading Industries
acceleration of depreciation
investment tax credit
tax exempt
Functional Incentives
Induistrial Incentives
Organisation for Economic Co-operation and Development
OECD
European Union
EU
soft law
Irish law
SDGs
Type
thesis
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