Efficient use of research allowance

The R&D super deduction is an additional pre-tax deduction available to eligible resident enterprises that are subject to audit-based corporate income tax assessment (not deemed/assessed collection) and that can accurately collect, allocate, and account for qualifying R&D expenses on a project basis.

Since 1 January 2023, the general additional deduction ratio for eligible expense-type R&D costs has been 100%.

Standard rate (expense-type R&D): For every CNY 100 of qualifying R&D expenses that are expensed in the current period, a total of CNY 200 may be deducted before tax (CNY 100 ordinary deduction plus CNY 100 additional deduction).

Capitalized R&D (intangible assets): Where R&D activities result in the formation of an intangible asset, the asset is amortized for tax purposes at 200% of its cost. The amortization period may not be less than 10 years.

Strategic industry enhancement: Enterprises engaged in integrated circuits (IC) and industrial mother machine sectors may apply a 120% additional deduction (i.e., a total tax deduction of 220%) in accordance with the relevant applicable policy documents and within the prescribed policy period.

Negative list: Enterprises whose main business revenue accounts for more than 50% and falls within excluded industries — including tobacco, accommodation and catering, wholesale and retail, real estate, leasing and business services, and entertainment — are not eligible to apply the R&D additional deduction.

Entrusted (domestic) R&D: For R&D activities entrusted to domestic third parties, 80% of the actual entrusted R&D expenditure may be included in the entrusting party’s deductible R&D base. The entrusted party may not claim an additional deduction on the same expenses.

Entrusted (overseas) R&D: For R&D entrusted overseas, 80% of the actual expenditure may be included in the entrusting party’s R&D base. The additional deduction attributable to overseas entrusted R&D shall not exceed two-thirds of the domestic qualifying R&D expenses. R&D entrusted to overseas individuals does not qualify.

“Other related expenses” cap: Certain ancillary R&D costs (e.g., travel expenses, IP-related fees, testing and trial production expenses) are subject to a 10% cap, calculated in accordance with the prescribed formula and applied on an annual aggregated basis across projects.

China provides accelerated depreciation and immediate expensing mechanisms to support technological upgrading and equipment renewal in accordance with applicable policy notices.

CNY 5 million threshold: Equipment and instruments with a unit value not exceeding CNY 5 million may be fully expensed (100% tax deduction) in the year of acquisition during the applicable policy period.

Higher-value assets: For assets exceeding CNY 5 million, enterprises may apply shortened depreciation periods (for example, 60% of the statutory useful life) or accelerated depreciation methods such as the double-declining balance method or sum-of-years-digits method, in accordance with tax regulations.

Local financial subsidies: In addition to national tax incentives, local governments may provide fiscal subsidies or grants for R&D equipment upgrades. These subsidies are administered by local science and technology authorities and are separate from corporate income tax filing procedures.

10-year loss carry-forward: Enterprises that qualify as High and New Technology Enterprises (HNTEs) or Technology-based SMEs in the relevant year may carry forward tax losses for up to 10 years, compared to the standard 5-year carry-forward period.

Prepayment claiming: Enterprises may elect to enjoy the R&D additional deduction during July and October quarterly corporate income tax prepayment filings, provided they are able to accurately account for R&D expenses, rather than waiting until the annual final settlement.

Preferential CIT rates: The R&D super deduction is an additional pre-tax deduction and not a refundable tax credit. Qualified HNTEs are subject to a reduced 15% corporate income tax rate. Small and Low-Profit Enterprises may benefit from preferential effective tax treatment on the first CNY 3 million of annual taxable income in accordance with the applicable policy rules.

The United Kingdom operates a streamlined R&D tax relief system designed to drive domestic innovation. For accounting periods beginning on or after 1 April 2024, the system consists of two primary regimes: the Merged R&D Expenditure Credit (Merged RDEC) and the Enhanced R&D Intensive Support (ERIS).

1. Merged R&D Expenditure Credit (RDEC)

The Merged RDEC is the default scheme for both SMEs and large enterprises. It provides an above-the-line taxable expenditure credit, treated as trading income and subject to Corporation Tax.

· Credit Rate: A taxable credit of 20% of qualifying R&D expenditure.

• Net Benefit:

o Profitable Companies: At the main Corporation Tax rate (currently 25%), this results in an effective benefit of approximately 15%.

o Companies taxed at the small profits rate (currently 19%): This results in an effective benefit of approximately 16.2%.

(Note: The effective benefit depends on the applicable Corporation Tax rate, including any marginal relief.)

· PAYE Cap: The payable credit is subject to a PAYE cap of £20,000 plus 300% of the company’s relevant PAYE and Class 1 NIC liabilities for the period (unless exempt). Under the merged RDEC scheme, any excess over the cap is carried forward to the next accounting period.

· Contracted R&D: The decision-maker rule applies. Where R&D is contracted out, the company that directs, controls, and bears the economic risk of the R&D (generally the customer) is entitled to claim, preventing double-claiming by subcontractors.

2. Enhanced R&D Intensive Support (ERIS)

ERIS is a more generous relief available to loss-making, R&D-intensive SMEs.

• Eligibility:

o Must meet the SME definition (< 500 employees; turnover < €100m or balance sheet total < €86m).

o Must be loss-making for tax purposes before applying the additional deduction.

o Intensity Condition: Relevant R&D expenditure must be at least 30% of total relevant expenditure for the period (including expenditure of connected companies, where applicable).

o Grace Period: Companies that met the 30% intensity threshold in the previous 12-month accounting period and made a valid SME or ERIS claim for that period may continue to claim ERIS for one further period even if the threshold is not met in the current period.

• Benefit Rate:

o Additional Deduction: An extra 86% deduction (186% total) on qualifying costs.

o Payable Credit: Losses may be surrendered for a payable tax credit of up to 14.5% (not taxable).

o Cash Value: At the maximum rate, this equates to up to £26.97 for every £100 of qualifying R&D expenditure.

· PAYE Cap: ERIS is also subject to the PAYE cap, unless the company qualifies for an exemption under the relevant rules.

3. Research and Development Allowance (RDA)

For qualifying capital expenditure incurred on assets used for R&D (e.g., plant, machinery, and certain buildings or structures used for R&D activities) that does not qualify for revenue-based claims:

· Rate: 100% first-year allowance under the Capital Allowances Act 2001, allowing the full qualifying cost to be deducted from taxable profits in the year of expenditure.

4. Eligible Expenditures & Geographical Restrictions

· Qualifying Costs: Staff costs, consumables (including water and fuel), software, data licences, cloud computing services, pure mathematics, certain subcontracted R&D, and externally provided workers (subject to statutory conditions).

· The UK Restriction: For accounting periods beginning on or after 1 April 2024, relief is generally restricted to R&D activities physically undertaken in the UK.

o Subcontractors: Expenditure on subcontracted R&D performed overseas is not eligible unless a statutory overseas exception applies. o EPWs (Externally Provided Workers): Expenditure on EPWs whose R&D duties are performed overseas is not eligible unless a statutory overseas exception applies.

· Exceptions: Overseas expenditure is permitted only where it is wholly unreasonable to replicate the necessary geographical, environmental, social, or regulatory conditions in the UK (for example, deep-sea testing or certain clinical trials). Cost considerations or the availability of local talent alone are not sufficient grounds for exemption.

5. Administration & Compliance

· Claim Notification: Companies that have not claimed R&D relief in any of the previous three accounting periods must notify HMRC of their intention to claim within 6 months of the end of the accounting period for which relief is sought.

· Additional Information Form (AIF): A mandatory digital form must be submitted before or on the same day as the Corporation Tax return (CT600). Where submitted on the same day, the AIF must be filed first. It requires detailed project descriptions and a breakdown of qualifying expenditure. Failure to submit a valid AIF renders the claim invalid.

France maintains a competitive R&D support system, primarily structured around the CIR, the CICo, the CII, and specific regimes for young innovative companies (JEI/JEC).

Recent reforms under the Finance Law for 2025 (applicable to expenses incurred from 15 February 2025) reduced the scope of the CIR base by removing certain categories of ancillary costs and reinforcing the focus on direct R&D expenditure.

The CIR is a permanent tax mechanism intended to companies carrying out eligible R&D activities in France and subject to corporate income tax (IS) or income tax under a real taxation regime, irrespective of size or sector.

Rates

• 30% of eligible R&D expenses up to €100 million, and 5% beyond
• 50% rate applicable in the Overseas Departments (DOM) for expenses up to €100 million and 5% beyond
• 35% and 40% in Corsica respectively for medium-sized and small entreprises

Eligible Expenses (rules applicable to expenses incurred from 15 February 2025)

• Personnel costs: salaries and mandatory social security contributions for researchers and technicians directly engaged in R&D.
  • The former enhanced calculation for “jeunes docteurs” (young PhD graduates) is suppressed for expenses incurred from 15 February 2025; such costs are included at their actual amount.
• Depreciation: tax-deductible depreciation of fixed assets allocated directly to R&D activities.
• Operating expenses (forfait): calculated as
  • 40% of eligible personnel costs, and
  • 75% of eligible depreciation expenses. (The personnel costs forfait was reduced from 43% to 40% for expenses incurred from 15 February 2025.)
• Subsidies and public funding: qualifying public subsidies relating to the same R&D expenses must be deducted from the CIR base (per the applicable statutory/doctrinal rules).
• Research expenses subcontracted to approved public or private research organizations.
• Standardization-related expenses
• Excluded from the base (from 15 February 2025):
  • Expenses related to technology monitoring (“veille technologique”),
  • Costs of registering and maintaining patents and Plant Variety Certificates (PVCs).
  • Depreciation allowances for patents acquired for research purposes and PVCs

Imputation and Refund

• The CIR is deducted from the corporate income tax due for the year in which the expenses are incurred.
• Any non-deducted credit becomes a receivable against the French State and may be used during 3 years
• Immediate refund is available for SMEs (as defined in Community regulations), , JEI, certain new companies under statutory conditions, and companies subject to specified insolvency-type proceedings.
• Other companies may obtain a refund after a three-year carry-forward period if the credit has not been fully used.

Since the 2022 Finance Act, the CICo supports effective research collaboration between companies and Research and Knowledge Dissemination Organisations (ORDCs).

• Rate:
  • 40% for large companies,
  • 50% for SMEs.
• Cap: Eligible expenses are capped at €6 million per year.
• Key condition: The collaboration must be genuine and balanced; the ORDC must bear at least 10% of the eligible project costs.
• The invoice must be based on cost price.

These regimes provide targeted exemptions to support young, R&D-intensive companies.

JEI (Jeune Entreprise Innovante)

A company may qualify as a JEI if it:

• Meets the EU SME definition,
• Is independent and new
• Meets the age condition:
  • Created on or before 31 December 2022: less than 11 years old,
  • Created from 1 January 2023: less than 8 years old.
• Allocate at least 15% of expenditure to R&D; this threshold raised to 20% and applicable according to the official entry-into-force rules:
  • For corporate income tax (IS): applies to financial years closed from 1 March 2025,
  • For income tax (IR): applies to tax due from 2025,
  • For CFE and property tax: applies from 1 January 2026.
• Have at least 50% of its capital held by one of the following entities:
  • An individual.
  • Another JEI.
  • A public-interest scientific association or foundation.
  • A public research and higher education institution (or one of its subsidiaries).
  • An investment company.

Benefits:

• Exemptions from employer social security contributions for eligible R&D personnel, subject to statutory caps and conditions.
• Full or partial tax exemptions from corporate income tax during the first two financial years. JEIs created from 1 January 2024 can no longer benefit from the profit tax exemption.

JEC (Jeune Entreprise de Croissance)

The JEC status applies to eligible SMEs meeting the legal JEI eligibility criteria, with an R&D expenditure between 5% and 15% of their expenses as from Juanuary 1, 2025, and between 5% and 20% of their expenses as from March 1, 2025.

Benefits:

• The benefits associated with this status are similar to those granted under JEI status. Additional specific benefits are granted in accordance with the rules applicable to JECs.

JEIR (Jeune Entreprise d’Innovation et de Rupture)

The JEIR status applies to eligible SMEs meeting the legal JEI eligibility criteria, with an R&D expenditure of at least 30% of their expenses as from Juanuary 1, 2025.

Benefits:

The benefits associated with this status are similar to those granted under JEI status. Additional specific benefits are granted in accordance with the rules applicable to JEIRs.

The CII is available exclusively to SMEs SMEs (as defined in Community regulations) that are not experiencing financial difficulties and covers downstream innovation activities, notably the design and testing of prototypes or pilot installations for new products.

• Rate: 20% of eligible expenses (rate reduced effective 1 January 2025).
• Annual cap: Eligible expenses limited to €400,000 per year per company.

The 2025 Finance Act extended the CII until 2027.

Brazil grants tax incentives for technological research and innovation under Law No. 11.196/2005 (Lei do Bem).

Eligibility is restricted to legal entities taxed under the Lucro Real regime that maintain tax regularity ( regularidade fiscal). The additional exclusion provided under Article 19 applies only up to the amount of taxable profit (lucro real and corresponding CSLL calculation base) in the relevant fiscal year. Any excess exclusion cannot be carried forward.

The regime allows an additional exclusion of qualifying research and technological innovation expenses from the calculation basis of IRPJ and CSLL, subject to statutory limits and conditions.

Standard Rate

• Additional exclusion of 60% of eligible R&D expenditures.

Incremental Increase (Research Personnel Variation)

• Increase of up to 5% in the number of researchers exclusively dedicated to R&D: additional exclusion may reach 70%.
• Increase above 5%: additional exclusion may reach 80%.

Patent/Cultivar Increase

• An additional 20% exclusion may be applied in the fiscal year in which a patent or cultivar resulting from the project is formally granted/registered, subject to legal requirements.

Limitation

• The total additional exclusion is limited to the amount of taxable profit prior to the incentive.
• Unused excess cannot be carried forward to subsequent periods.

In addition to the additional exclusion mechanism, the law provides specific tax measures:

Accelerated Depreciation (Art. 17, III)

• Accelerated depreciation for new machinery and equipment intended for use in R&D activities.
• The tax effect applies to the calculation of IRPJ (lucro real).

Accelerated Amortization (Art. 17, IV)

• Accelerated amortization of acquired intangible assets used in R&D activities.

These accelerated depreciation and amortization mechanisms do not apply for purposes of calculating the CSLL base, as expressly restricted by statute.

IPI Reduction

• Up to 50% reduction of IPI on equipment, instruments, and tools intended for R&D activities, subject to regulatory conditions.

Withholding Tax (IRRF) Incentive

• Zero-rate IRRF on remittances abroad for the registration and maintenance of trademarks, patents, and cultivars, under the conditions established by law.

Eligible expenditures generally include:

• Personnel: Salaries and social charges of researchers and technical staff directly engaged in R&D activities.
• Contracts: Payments to universities, research institutions (ICTs), and other entities for the execution of qualifying R&D projects.

Expenditures of a purely administrative, commercial, or non-technical nature are not eligible.

The law requires that eligible R&D expenditures be properly identified and controlled in specific accounting records. Failure to comply with statutory requirements may result in disallowance of the benefit and recovery of unpaid taxes with applicable charges.

The Lei do Bem incentives are subject to statutory compatibility rules and may not be cumulatively applied with certain other specific federal incentive regimes, as defined in the law.

Annual Reporting (FORMP&D) Companies applying the incentive must submit the annual R&D report (FORMP&D) to the Ministry of Science, Technology and Innovation (MCTI). Under Portaria MCTI No. 9.563/2025, submission is permitted until 31 August of the year following the fiscal year in which the expenditures were incurred.

Tax Regularity and Sanctions Maintenance of tax regularity is required. Non-compliance or improper use of the incentive may result in loss of the benefit and recovery of unpaid taxes, plus interest and penalties, in accordance with the statute.

Non-Refundability and No Carry-Forward The additional exclusion under Article 19 is limited to the taxable base of the respective fiscal year. Any unused portion cannot be refunded or carried forward to subsequent years.

For the 2026 tax year, the following rates and caps apply:

• Fundamental & Experimental Research: 10% of eligible expenses, capped at €5 million annually. This is a structural measure through 2031.
• Technological Innovation (Ordinary): Abolished. This credit expired on December 31, 2025, and was not extended.
• Green and Digital Innovation: Now primarily incentivized through Hyper-Amortization for capital assets. Separate volume-based credits for these categories have concluded.
• Design and Aesthetic Conception: 10% rate (extended for 2026 by Law 199/2025), capped at €2 million. Target sectors include fashion, furniture, and ceramics.
• Southern Italy (Mezzogiorno) Bonus: Confirmed for 2026. Rates remain at 45% (Small), 35% (Medium), and 25% (Large) for R&D in the South.

The Patent Box remains a structural cost-based incentive.

• Benefit: A 110% super-deduction on R&D expenses for qualifying IP (software, patents, designs).
• Fiscal Impact: Total deduction of 210% from IRES and IRAP bases.
• Recapture: Companies can claim the deduction for costs incurred in the 8 years prior to obtaining the IP title.

Canada’s primary instrument for supporting business innovation is the Scientific Research and Experimental Development (SR&ED) tax incentive program. It provides:

• an income tax deduction for eligible SR&ED expenditures; and
• an investment tax credit (ITC) that may reduce taxes payable and, in some cases, generate a refund.

1. Scientific Research and Experimental Development (SR&ED) Investment Tax Credit (ITC)

The SR&ED ITC rate and refundability depend on the type of claimant (e.g., CCPC, other corporation, individual, trust) and, for corporations, factors such as taxable income and taxable capital.

Enhanced rate (35%)

Current law:

• Eligibility: Generally available to Canadian-controlled private corporations (CCPCs), subject to the program rules.
• Expenditure limit: The enhanced rate applies up to an annual expenditure limit (generally CAD 3 million), which may be reduced based on taxable capital.
• Phase-out: The enhanced expenditure limit is reduced when taxable capital employed in Canada exceeds specified thresholds (generally within the CAD 10M–50M range).
• Refundability: Refundability is conditional and depends on the claimant’s status and applicable rules. It is not automatically “100% refundable.”

Proposed legislative changes (not yet enacted):

The Department of Finance has proposed reforms that would:

• extend enhanced-rate eligibility to certain eligible Canadian public corporations;
• increase the enhanced-rate expenditure limit from CAD 3.0M to CAD 4.5M;
• increase the taxable-capital phase-out thresholds from CAD 10M/50M to CAD 15M/75M; and
• restore capital expenditure eligibility (see below).

These changes are proposed to apply to taxation years beginning on or after December 16, 2024, subject to enactment.

General rate (15%)

• Eligibility: Generally applies to non-CCPC corporations and to CCPC expenditures exceeding the enhanced-rate expenditure limit.
• Refundability: For many corporations, the 15% ITC is generally non-refundable, though refundability may apply in certain cases and differs for individuals and trusts.
• Carry-over: Unused ITCs may be carried back 3 years or forward 20 years.

2. Eligible expenditures (overview)

SR&ED incentives are calculated based on allowable SR&ED expenditures, which may include current and capital expenditures, depending on the taxation year and applicable legislation.

Proposed change (not yet enacted):

The government has proposed restoring the eligibility of certain capital expenditures for both the deduction and ITC components for taxation years beginning on or after December 16, 2024, subject to conditions and enactment.

Common expenditure categories

Salary or wages For employees directly engaged in SR&ED. Wages for SR&ED work performed outside Canada may be claimable only under specific conditions and are subject to a 10% limitation mechanism.

Materials Materials consumed or transformed in the performance of SR&ED.

Contract expenditures / third-party payments SR&ED contract expenditures and third-party payments are generally described as 80% eligible for ITC, subject to detailed rules and limitations, including arm’s-length versus non–arm’s-length treatment.

Overhead

Claimants may use either:

• the traditional method (actual overhead allocation), or
• the proxy method, where the prescribed proxy amount (PPA) is 55% of the salary base.

3. Administration and compliance

Filing deadline Corporations must file prescribed SR&ED information by the SR&ED reporting deadline, which is effectively 18 months after tax year-end. Claims filed after this deadline are not accepted for those expenditures.

Support services The CRA offers the First-Time Claimant Advisory Service (FTCAS) for eligible first-time or infrequent claimants.

Pre-claim consultations are no longer available as of January 1, 2026.

Forms

Corporate claimants generally file:

• Form T661 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim; and
• Schedule T2SCH31 – Investment Tax Credit – Corporations

with their corporate income tax return.

Australia’s primary federal support mechanism for business R&D is the Research and Development Tax Incentive (R&DTI). The program provides a tax offset to eligible R&D entities for eligible R&D activities and associated notional deductions. Access to the incentive depends on the entity’s aggregated turnover and compliance with the statutory activity and expenditure requirements.

The incentive is delivered as a tax offset applied against the company’s income tax liability.

Small R&D Entities

Aggregated Turnover < AUD 20 million

Rate

The refundable tax offset equals:

Company tax rate + 18.5%

The final offset percentage therefore depends on the applicable corporate tax rate. (For example, at a 25% corporate tax rate, the offset would equal 43.5%.)

Refundability

The offset is refundable. If the offset exceeds the entity’s income tax liability, the excess may be refunded in cash. Refundability may be subject to specific integrity provisions under tax law.

Large R&D Entities

Aggregated Turnover ≥ AUD 20 million

These entities receive a non-refundable tax offset calculated using an R&D intensity framework.

R&D Intensity

R&D intensity is calculated as:

Eligible R&D expenditure ÷ Total company expenditure

Rates

• Intensity Tier 1 (0–2%): Company tax rate + 8.5%
• Intensity Tier 2 (>2%): Company tax rate + 16.5% (applies only to the portion above the 2% threshold)

Unused non-refundable offsets may generally be carried forward to future income years, subject to applicable tax continuity rules.

Eligible Activities

Activities must qualify as either:

Core R&D Activities

Experimental activities:

• Whose outcome cannot be known or determined in advance based on current knowledge, information or experience;
• Conducted for the purpose of generating new knowledge;
• Conducted through a systematic progression of work.

Supporting R&D Activities

Activities that are directly related to core R&D activities. Where such activities produce goods or services, they must satisfy a dominant purpose test.

Routine commercial production, market research, cosmetic modifications, and other excluded activities do not qualify.

Eligible Expenditure

Eligible R&D expenditure may include:

• Salary and wages for employees engaged in R&D activities;
• Contractor expenditure (subject to eligibility conditions);
• Decline in value (depreciation) of R&D assets;
• Supplies and certain overheads directly related to R&D activities;
• Other eligible notional deductions under the legislation.

Certain expenditure types (e.g., interest expenses and building costs) are excluded.

Expenditure Cap

For income years commencing on or after 1 July 2021, the R&D premium applies to eligible R&D expenditure up to AUD 150 million per income year.

Expenditure above this threshold receives an offset at the prevailing corporate tax rate (without the additional R&D premium).

Minimum Expenditure Threshold

An entity must generally incur more than AUD 20,000 in eligible R&D expenditure in an income year to access the incentive.

This minimum threshold does not apply where R&D is conducted by a registered Research Service Provider or Cooperative Research Centre on behalf of the entity.

Overseas R&D

R&D activities conducted overseas are only eligible where covered by an Advance Finding issued by the administering authority. Approval is required before such overseas activities can be claimed.

The program operates under a dual-agency model:

• The Department responsible for industry (through Innovation and Science Australia functions) administers activity registration and findings;
• The Australian Taxation Office (ATO) administers the tax offset and reviews expenditure claims.

Registration

Entities must register their eligible R&D activities for each income year before claiming the tax offset in their company tax return. Registration is a prerequisite to claiming but does not constitute automatic approval.

Claim Process

The R&D tax offset is claimed through the company income tax return using the R&D Tax Incentive Schedule.

Entities must maintain contemporaneous documentation sufficient to substantiate:

• The experimental nature of core R&D activities;
• The systematic progression of work;
• The relationship between claimed expenditure and registered R&D activities.

Both administering bodies may conduct compliance reviews and audits.

The Indonesian government provides a Super Tax Deduction for companies engaging in eligible R&D activities. This incentive allows for a gross income reduction of up to 300% of the total costs incurred in conducting R&D. The breakdown of this deduction is as follows:

100% deduction of the actual costs incurred during the R&D activities.

Additional deductions up to 200% of the accumulated costs, contingent upon specific achievements:

• 50% additional deduction if the R&D results in obtaining intellectual property rights, such as patents or Plant Variety Protection (PVP) rights, registered in Indonesia.
• 25% further deduction if these intellectual property rights are also registered internationally.
• 100% additional deduction if the R&D reaches the commercialization stage.
• 25% extra deduction if the R&D is conducted in collaboration with Indonesian government R&D institutions or higher education institutions.

These additional deductions are applied over a period of up to five years from the registration of the intellectual property or the commencement of commercialization. The total additional deduction claimed in a fiscal year is capped at 40% of the taxable income for that year, with any excess amount eligible for carryforward to subsequent years.

To qualify for this Super Tax Deduction, the R&D activities must:

• Be conducted within Indonesia.
• Aim to advance the national economy, develop new industries and technologies, or facilitate the transfer of foreign technology to local businesses.
• Result in the creation of intellectual property or reach the commercialization stage.

Taxpayers intending to avail themselves of this incentive are required to submit an application to the Indonesian tax authorities, providing detailed documentation of the R&D activities and associated expenditures.

In December 2023, Saudi Arabia announced a tax incentive package to encourage multinational corporations to establish their regional headquarters (RHQs) within the country. Key features of this program include:

• Corporate Income Tax Exemption: A 30-year exemption from corporate income tax for RHQ-licensed entities, effective from the date of license issuance.
• Withholding Tax Exemption: A 30-year exemption from withholding taxes on payments related to approved RHQ activities.

These incentives aim to position Saudi Arabia as a central hub for multinational companies' regional operations. As of the announcement, over 200 companies had obtained RHQ licenses under this program.

Saudi Arabia has established several SEZs to promote investment in key sectors. Incentives offered within these zones include:

• Reduced Corporate Income Tax Rate: A 5% corporate income tax rate for up to 20 years.
• Withholding Tax Exemption: Unlimited withholding tax exemption for the repatriation of profits from SEZs to foreign entities.
• Customs Duties Deferral: Deferral of customs duties for goods and equipment within SEZs.
• Value Added Tax (VAT) Exemption: 0% VAT on goods exchanged within and between SEZs.

These incentives are designed to attract foreign direct investment and stimulate economic growth in targeted industries.

While these programs are not exclusively focused on R&D, companies engaged in innovative activities may benefit from the favorable tax environment within RHQs and SEZs. Additionally, Saudi Arabia's Vision 2030 initiative emphasizes the importance of innovation and technological advancement, which may lead to the development of R&D-specific incentives in the future.

Türkiye offers comprehensive tax incentives to promote Research and Development (R&D) and design activities. These incentives are supported by legislation such as the R&D and Design Activities Support Law No. 5746 and the Technology Development Zones Law No. 4691.

R&D Deduction: 100% of eligible R&D expenditures can be deducted from the corporate tax base.

• Income Tax Withholding Incentive: 90% of income tax on salaries of PhD holders and 80% for other R&D personnel is exempt.
• Social Security Premium Support: 50% of employer contributions for R&D and support staff salaries are covered by the government for five years.
• VAT Exemption: Purchases of new machinery and equipment for R&D projects are exempt from VAT.
• Stamp Tax Exemption: Documents related to R&D activities are exempt from stamp tax.

In July 2024, President Recep Tayyip Erdoğan announced a $30 billion incentive package to boost high-tech production, including electric vehicle manufacturing, semiconductor chip production, and battery development.

These incentives aim to strengthen Türkiye’s competitiveness in R&D and innovation.

Spain provides an R&D incentive framework under the Corporate Income Tax Law (Ley 27/2014, “LIS”), consisting of:

• Corporate Income Tax deductions for R&D and Technological Innovation (Articles 35 and 39 LIS), and
• Tax depreciation incentives for assets used in R&D.

R&D Tax Credit (Scientific Research & Development)

• Base rate: 25% of eligible R&D expenses.
• Qualified researchers: Additional 17% deduction for costs of qualified researchers exclusively assigned to R&D activities.
• Investments: 8% deduction for investments in tangible and intangible fixed assets (excluding land and buildings) exclusively used for R&D, subject to statutory permanence/holding requirements.

Technological Innovation (TI) Tax Credit

• Standard rate: 12% of eligible technological innovation expenses.
• Cap for advanced technology acquisition: Where the TI base includes acquisition of advanced technology (e.g., patents, licenses, know-how, designs), that component of the base is capped at €1 million per year.

• R&D assets: New tangible and intangible fixed assets used for R&D (excluding buildings) may be depreciated freely for tax purposes.
• Buildings used for R&D: Buildings used for R&D may be depreciated linearly over 10 years to the extent they are used for R&D.

• Eligible costs must be directly related to the activity, effectively applied to it, and individualized by project.
• Activities/costs carried out in Spain or in the EU/EEA may qualify under the statutory conditions.
• Subsidies attributable to the same activities reduce the deduction base.
• The law contains explicit exclusions for certain activities that do not qualify as R&D/TI.
• Software development may qualify as R&D where it meets the statutory criteria, while routine maintenance, updates, and similar activities are excluded.

Taxpayers may elect to apply R&D/TI deductions under a regime that:

• Applies the deduction with a 20% reduction (i.e., 80% of its nominal value), and
• Allows requesting payment (“abono”) via the tax return where there is insufficient tax liability, subject to statutory conditions and caps.

Key Conditions

• At least one year must have elapsed since the end of the tax period in which the deduction was generated.
• Compliance with the statutory workforce maintenance requirement.
• Reinvestment of an equivalent amount into qualifying R&D/TI expenses or assets within 24 months.
• Supporting documentation as required by law (including an informe motivado or a valuation agreement, as applicable).

Annual Caps

• €3 million per year for the combined amount of R&D and TI deductions.
• €1 million per year for the TI component.

The Netherlands supports business R&D through the WBSO (Wet vermindering afdracht loonbelasting en premie voor de volksverzekeringen), a volume-based fiscal incentive that reduces payroll tax and national insurance contributions for employers performing qualifying R&D (S&O) and provides a fixed income tax deduction for eligible self-employed entrepreneurs.

1. WBSO (Payroll Tax Reduction for R&D)

The WBSO allows employers to reduce the wage tax and national insurance contributions due on salaries of employees performing approved S&O activities. The benefit is calculated on the total approved S&O base (S&O wage costs plus, if chosen, additional S&O costs and expenditures).

2026 Rates & Thresholds (companies with employees)

• 36% of the first €380,000 of eligible S&O base
• 16% of the S&O base exceeding €380,000
• Start-up rate: 50% on the first €380,000 for companies officially designated as start-ups by RVO (meeting statutory criteria)

There is no absolute cap on total S&O volume. The reduction is limited to the amount of payroll tax due; payroll tax cannot be reduced below zero.

2. Eligible Expenditures

The S&O base consists of:

• S&O wage costs (approved S&O hours × S&O hourly wage as determined by RVO), and
• Either a fixed lump sum (forfait) for other costs and expenditures, or
• Actual S&O costs and expenditures.

The method must be chosen in the first application of the calendar year and applies to all applications in that year.

Option A – Fixed Sum (Forfait)

• Simplified calculation based on approved S&O hours
• €10 per S&O hour for the first 1,800 hours per calendar year
• €4 per S&O hour for all additional hours
• If no historical wage data is available, a statutory forfaitaire hourly wage may apply in accordance with RVO rules

Option B – Actual Costs & Expenditures

• Directly attributable S&O costs and investments in new business assets may be claimed
• Costs and expenditures must be directly attributable and exclusively serviceable to S&O
• Detailed administrative documentation is required (invoices, proof of payment, allocation to project)

3. Self-Employed Entrepreneurs (ZZP)

Self-employed individuals who perform at least 500 S&O hours in a calendar year may qualify for a fixed S&O deduction in their income tax return.

S&O Deduction

• The annual S&O deduction amount is determined by the Ministry of Economic Affairs and published for each calendar year
• An additional starter deduction applies for qualifying start-ups
• Only S&O hours performed within the approved application period count toward the 500-hour requirement
• The entrepreneur must also meet the general 1,225-hour income tax entrepreneur criterion to apply the deduction

4. Application & Administration

Application

• Must be filed in advance via the RVO online portal
• WBSO cannot be applied retroactively
• The application period must be at least 3 consecutive calendar months and runs automatically until 31 December

Deadlines (Companies with Employees – S&O Withholding Agents)

• Applications may be submitted until the last day of the month preceding the start month
• For a start date of January 1, the deadline is December 20 of the preceding year
• Maximum 4 applications per calendar year

Deadlines (Self-Employed – S&O Taxpayers)

• The application period starts on the date of submission and runs until 31 December
• Application must be submitted before S&O hours are performed
• Only S&O hours performed after submission are eligible

Reporting & Compliance

• Realised S&O hours (and, if applicable, realised costs and expenditures) must be reported to RVO within 3 months after the end of the calendar year (no later than 31 March of the following year)
• Companies must maintain a mandatory S&O administration including:
  • Project documentation
  • Daily time tracking per employee per project
  • Cost and expenditure documentation if actual costs are claimed
• Failure to comply may result in correction decisions, repayment of benefits, and administrative penalties.

• Standard R&D Credit: Companies can claim a tax credit of up to 15% of qualified R&D expenditures against their corporate income tax payable for the current year. The credit is capped at 30% of the total tax payable for that year and cannot be carried forward.
• Alternative Option: Alternatively, companies may opt for a 10% tax credit on qualified R&D expenditures, which can be applied against the current year's tax payable and carried forward for up to two subsequent years. The same 30% cap applies.

These provisions are effective from January 1, 2016, to December 31, 2029.

In January 2023, Taiwan amended the SII to bolster support for critical sectors, introducing the following incentives effective from January 1, 2023, to December 31, 2029:

• Forward-Looking Innovative R&D Expenditure Credit: Companies can claim a tax credit of up to 25% of expenditures on forward-looking innovative R&D against their corporate income tax payable for the current year.
• Advanced Manufacturing Equipment Credit: A tax credit of up to 5% is available for investments in equipment used in advanced manufacturing processes, applicable against the current year's corporate income tax payable.

To qualify, companies must meet specific criteria, including minimum R&D investment thresholds and strategic importance in global supply chains.

• Deduction for Substantial Investments: Companies investing after-tax profits in assets such as buildings, machinery, equipment, software, or technology for business operations can deduct the investment amount from the tax base, thereby reducing the 5% surtax on undistributed earnings. The total investment must exceed TWD 1 million over a three-year period.
• Tax Credits for Smart Machinery and 5G Systems: From January 1, 2019, to December 31, 2024, companies investing in smart machinery or 5G systems can claim a tax credit of up to 5% of the expenditure against the current year's corporate income tax payable, or 3% of the expenditure, creditable over three years. The credit is capped at 30% of the current year's corporate income tax plus the profit retention tax payable.

These incentives aim to promote industrial innovation, technological advancement, and the development of high-value industries in Taiwan.