2023 Volume 38 Issue 3 Pages 340-353
This paper explores tax incentives for business R&D based on the findings from the OECD microBeRD project in which we participated. Using official microdata for R&D statistics and tax relief for OECD 20 countries, the project has conducted a cross-country analysis to assess the impacts of tax incentive and government direct funding on R&D investment. The results show that intramural R&D expenditures increase as B-Index decreases. However, its marginal effect differs substantially by firm size class, with the effect being elastic for small-sized firms while it is inelastic for large-sized firms. The OECD microBeRD project has also examined a factor driving the rise in intramural R&D expenditures. It reveals that an increase in the headcount of R&D personnel is a crucial factor, not due to an increase in the wage of R&D personnel. Furthermore, it also finds that tax incentives exert a greater impact on intramural R&D expenditures compared to direct fundings.