What Are R&D Tax Credits


R&D incentives are offered globally by various Governments to R&D spenders who could be companies, not for profit organizations or even academia for incentivizing them for making investments in Research & Development.
The form of incentives offered by different countries varies from the tax credit, grant or low-cost debt funding, tax breaks such as reduced employee tax or other forms of benefits such as hassle-free imports for goods or consumables imported for R&D.
The most popular form of R&D incentive provided by most countries is R&D tax credit which simply means that companies can pay lower corporate taxes for doing R&D which is based on their R&D expenditure and size of the company; usually, startups and SMEs receive more tax benefits compared to larger companies.
Typically the R&D spender can deduct the R&D spend at a higher rate ranging from 125% to 400% of the R&D expenditure spent which leads to an increase in expenditure lowering tax liability for the R&D spender
Usually, the R&D tax credit is provided by most countries on eligible R&D projects for a particular year and even loss-making companies can avail the same.
Also in some countries such as Singapore even if the R&D is carried out in other countries is eligible as long the company is incorporated in that country.