Taxand, a global organisation of tax advisors to multinational businesses, has launched its second edition of the Taxand Global Guide to R&D Tax Incentives. Research and development (R&D) incentive regimes play an important – even pivotal – role in the final determination to locate, expand or close facilities. The guide is a desktop reference, with in-depth analysis from 48 countries worldwide, providing tax executives with the information needed to make those important operational decisions.
Despite the world’s major economies struggling to recover from the global financial crisis, Taxand’s research shows the outlook is positive for R&D. Decentralisation and the trend to locate R&D facilities offshore are driving the globalisation of R&D. Government tax incentives such as enhanced deductions, tax credits or outright cash grants indicate R&D is an important driver for a nation’s economy.
In light of the current turbulent economic times, and even with indications of increased R&D budgets by local governments, Taxand predicts that R&D will be placed under the microscope to ensure expenditures drive product development in the near term. Tax executives should be prepared to include these factors in their discussions of where R&D activities are or should be located.
As companies focus on managing R&D spend to drive product development, close attention should also be paid to evaluating the jurisdictions where R&D is taking place to ensure operational efficiencies are maximised.
James Eberle, Taxand US, said: “Today we see many governments looking for ways to ‘tighten their belts’. But even during these times, we see little evidence that governments are looking to reduce research incentives. On the contrary, many governments acknowledge that these incentives spur job creation and create a healthy economy, upon which most governments rely for tax revenues.
“Multinational companies are constantly looking for ways to make their operating structure efficient from a cost point of view. Governments are constantly looking for ways to lure more business activities to their jurisdictions with research incentives including enhanced deductions, tax credits or outright cash grants. Taken together, these two forces match up in ways beneficial to both parties,” he added.
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