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Tax incentives for small and medium-sized business R&D

Vol. 25, Iss. 2, FEBRUARY 2019

Received: 22 November 2018

Received in revised form: 7 December 2018

Accepted: 21 December 2018

Available online: 28 February 2019

Subject Heading: FISCAL SYSTEM

JEL Classification: H20, H25, O31

Pages: 409–425

https://doi.org/10.24891/fc.25.2.409

Viktorova N.G. Peter the Great St. Petersburg Polytechnic University, St. Petersburg, Russian Federation
viktorova_ng@spbstu.ru

https://orcid.org/0000-0002-7355-3541

Vylkova E.S. North-West Institute of Management, Branch of Russian Presidential Academy of National Economy and Public Administration, St. Petersburg, Russian Federation
vylkovaelena@mail.ru

https://orcid.org/0000-0002-3736-9683

Pokrovskaya N.V. Saint Petersburg State University, St. Petersburg, Russian Federation
n.pokrovskaia@spbu.ru

https://orcid.org/0000-0002-8314-9470

Subject Small and medium-sized enterprises play a special role in high-tech product manufacture and promotion. Therefore, additional tax incentives for small and medium-sized innovative enterprises should be an important area of government regulation.
Objectives The study aims to investigate tax regulation of R&D in Russia and foreign countries, focusing on special conditions for small and medium-sized high-tech businesses.
Methods In the course of the study, we reveal special conditions for small and medium-sized innovative businesses. Based on OECD statistics, we analyze the level of tax incentives for R&D.
Results The paper identifies countries that apply tax incentives or direct funding for R&D. The State support to innovation is high enough in all of them, though developed countries do not have a single approach to incentives for knowledge-intensive SMEs. In Russia, the businesses conducting research and development also have government support. However, the values of 1-B index that characterizes the tax subsidy rate are low. This points to the lack of priorities for high-tech SMEs.
Conclusions More significant tax incentives for small and medium-sized enterprises will have a beneficial impact on innovation growth in Russia.

Keywords: corporate income tax, innovation, research and development, small and medium-sized business, tax credit

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