Tax incentives and R&D: an evaluation of the 2002 UK reform using micro data

Guceri, Irem (2015) Tax incentives and R&D: an evaluation of the 2002 UK reform using micro data. CBT, Oxford.

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Abstract

The United Kingdom introduced an R&D tax incentive scheme first for SMEs in 2000 and then for large firms in 2002, gradually increasing the generosity of both schemes after 2008. This study exploits the differences between companies with similar characteristics that were just above the size threshold for eligibility to the SME scheme and those that were just below, before and after the 2002 reform. This allows for a difference-in-differences approach to measure the (additional) impact of the tax incentives on firms around this size threshold. Treatment group firms are found to have increased their R&D spending by around 18 percent on average in response to the large company tax incentive, implying a user cost elasticity of -1.35. We do not find significant differences in this effect between sectors.

Item Type: Other Working Paper
Keywords: R&D, tax credits, difference-in-differences
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 08 Feb 2017 14:05
Last Modified: 08 Feb 2017 14:05
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6283

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