On 9 December 2021 the OECD published the latest research and development (R&D) tax incentives database report. This was accompanied by the 2021 update of the R&D Tax Incentives database and a series of R&D tax incentive country profiles.

Governments provide various types of direct support measures such as grants to promote business R&D and encourage innovation and economic growth. Governments are however increasingly using tax incentives for R&D support. The updates published by the OECD provide the latest information on the use of R&D tax incentives in 38 OECD countries and 11 partner countries. These analyse the main features in the design of the R&D incentives on the basis of data collected during the 2021 R&D tax incentives survey.

The OECD has for many years been developing measurement and analysis methodologies to obtain statistical evidence on the use, cost and impact of R&D tax incentives. Information is given in the report on the design of R&D incentives and their cost to governments, highlighting policy developments including responses to the crisis resulting from the pandemic. The R&D country profiles look at the trends in the amounts of relief offered; the cost of giving the relief; and the uptake of the R&D tax relief by taxpayers. The report provides a summary of the distribution of recipients of R&D tax relief analysed by their size and the industry in which they operate.

The R&D incentives database report sets out the latest OECD indicators of implied R&D tax subsidy rates and of government tax relief for R&D expenditure (GTARD). By looking at these two indicators it is possible to gain an integrated view of government support for business R&D in different countries and across different years.

The report includes some statistics that have been collected for the first time in 2021. These include statistics for special, temporary or emergency tax relief provision for R&D in specific priority areas, for example green or energy related R&D. There is also analysis of the possibility for firms to trade or exchange R&D tax benefits with third parties, or to use the benefits as a security. There is also an analysis of the distribution of GTARD by economic ownership (foreign-controlled affiliates and domestic enterprises with multinational presence) in various industrial sectors.

Statistics are presented for the number of R&D tax relief beneficiaries and qualifying business R&D expenditures in different countries and years.

Although some of this data is still experimental, especially for purposes of international comparisons, it could provide scope for a more comprehensive interpretation of the cost of government tax relief for R&D in the OECD and partner economies, which would be a valuable input for future policy decisions.

Policy developments during 2021 reflect an increase in the accessibility and generosity of R&D tax incentive measures. New R&D tax incentive schemes were introduced in Finland and relief was extended in China, Italy, Japan, Portugal and Turkey. The R&D tax credit or allowance rates were increased in Australia, China, Iceland, Italy, Netherlands and Spain and some countries increased the ceilings on the amount of eligible R&D expenditure or the value of R&D tax relief. Only one ceiling was introduced (in the UK) and there were no decreases in rates or repeal of R&D tax incentives. The crisis caused by the pandemic influenced the R&D reforms undertaken in 2021.