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

Vol. 25, Iss. 2, FEBRUARY 2019

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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

Viktorova N.G. Peter the Great St. Petersburg Polytechnic University, St. Petersburg, Russian Federation

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

Pokrovskaya N.V. Saint Petersburg State University, St. Petersburg, Russian Federation

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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