The Council of Ministers published a bill introducing amendments to the Corporate Income Tax Law regarding tax incentives for the development of research and development (R&D) activities on 7 March 2016. The bill foresees the following measures:
Elimination of taxation of in-kind contributions of intellectual and industrial property – the ostensible value of shares in a company acquired in exchange for an in-kind contribution in the form of a commercialized intellectual property will not be taxable at the time of the contribution.
Increase in the percentages of deductible qualifying expenses incurred for R&D activities – micro and small and medium-sized enterprises (SMEs) will be permitted to deduct 50% of all qualifying expenses, whereas large companies will be permitted to deduct 50% of payroll expenses of employees involved in R&D activities, and 30% of the other qualifying expenses.
Currently, all companies are entitled to deduct 30% of payroll expenses. Micro and SMEs may deduct 20% of the other qualifying expenses, and large companies may deduct 10% of such expenses.
Taxpayers methodically increasing their level of R&D expenses will be allowed additional tax relief. This concerns taxpayers that carry out R&D activities for at least 3 years. In the 4th year of R&D activities, the taxpayer may subtract an additional 50% on the increase in R&D expenses in the 4th year of operation if the R&D expenses in the fourth year are at least 50% higher than the average annual R&D expenses in the first 3 years of operation.
