---
title: "Does Finland Need R&D Tax Incentives?"
authors:
  - name: "Koski, Heli"
    url: "https://www.etla.fi/henkilot/koski-heli/"
    sameAs:
      - "https://twitter.com/heli_koski"
  - name: "Fornaro, Paolo"
date_published: "2021-06-30"
series: "ETLA Muistio - ETLA Brief"
series_number: "97"
issn:
  - "2323-2463"
jel_codes:
  - "K34"
  - "L5"
  - "O3"
  - "O31"
language: "fi"
publisher: "ETLA Economic Research"
pdf_url: "https://www.etla.fi/wp-content/uploads/ETLA-Muistio-Brief-97.pdf"
identifier: "https://www.etla.fi/julkaisut/id/ETLA-Muistio---ETLA-Brief-97"
abstract_translations:
  en: "In OECD countries, tax subsidies are widely used to increase incentives for companies to invest in research and development. Recent international research suggests that R&D tax support increases both R&D investment and patent applications. However, it is unclear what kind of R&D tax scheme provides the best incentives for companies to invest in research and development and generate innovation. There are considerable differences between the countries’ R&D tax relief schemes, not only in terms of the amount of tax relief but also in terms of the characteristics of the tax support scheme. Typically, a company can make a tax deduction from income tax based on the total volume of R&D costs underlying the relief. Our empirical analysis among 35 OECD countries during 2000–2018 indicates that the generosity of the R&D tax subsidies positively relates to the R&D investment intensity of the corporate sector. Our study further suggests that the R&D intensity and the number of patent applications filed with the USPTO are higher in the countries that use either the incremental R&D tax scheme or the hybrid scheme involving incremental and volume-based R&D tax deduction possibilities."
---

# Does Finland Need R&D Tax Incentives?

**Published:** 2021-06-30  
**Categories:** Promemoria, Publikationer  
**URL:** https://www.etla.fi/sv/publikationer/tarvitaanko-suomessa-tk-verokannustimia/

#### Abstract

In OECD countries, tax subsidies are widely used to increase incentives for companies to invest in research and development. Recent international research suggests that R&D tax support increases both R&D investment and patent applications. However, it is unclear what kind of R&D tax scheme provides the best incentives for companies to invest in research and development and generate innovation. There are considerable differences between the countries’ R&D tax relief schemes, not only in terms of the amount of tax relief but also in terms of the characteristics of the tax support scheme. Typically, a company can make a tax deduction from income tax based on the total volume of R&D costs underlying the relief.

Our empirical analysis among 35 OECD countries during 2000–2018 indicates that the generosity of the R&D tax subsidies positively relates to the R&D investment intensity of the corporate sector. Our study further suggests that the R&D intensity and the number of patent applications filed with the USPTO are higher in the countries that use either the incremental R&D tax scheme or the hybrid scheme involving incremental and volume-based R&D tax deduction possibilities.

---

## Additional Information

**Kirjoittajat:** Koski, Heli - Fornaro, Paolo

**Publication Research:** No

**Kansikuva:** https://www.etla.fi/wp-content/uploads/etla-muistio-brief-97-kansi.jpg

**Lataa Pdf:** https://www.etla.fi/wp-content/uploads/ETLA-Muistio-Brief-97.pdf

**Key Words:** R&D tax incentives, R&D investments, Innovation policy, Patents

**Jel:** K34, L5, O3, O31

**Paivays:** 30.06.2021

**Sivuja:** 10

**Kieli:** fi

**Sarja:** ETLA Muistio - ETLA Brief

**Sarja Nro:** 97

**Issn:** 2323-2463

**Saatavuus:** 2

65348

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