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Public support to business research and development in Belgium: fourth evaluation

Michel Dumont

MPRA Paper from University Library of Munich, Germany

Abstract: Belgium met its Europe 2020 target that Research and Development (R&D) expenditures should equal 3% of Gross Domestic Product. This report presents the results of an evaluation of the extent to which public support to business R&D has been instrumental in reaching this target, by stimulat-ing additional R&D expenditures of firms. Regional direct support (subsidies), and the federal par-tial exemption from payment of the withholding tax on the wages of R&D personnel, appear to en-courage firms to increase their investment in R&D activities, in addition to the amount of public support that they receive. By contrast, some incentives provided through corporate income taxation (CIT) seem to have no additionality effect or even result in the crowding out of firms’ own R&D ex-penditures. As the CIT incentives claim the lion’s share of the rapidly rising budgetary cost of public support to business R&D, the efficiency of tax incentives for R&D activities could be increased by introducing a cap on the total amount of public support that companies can receive, as suggested by the findings of a cross-country OECD study.

Keywords: business R&D; tax incentives; subsidies; policy mix; evaluation; spillovers (search for similar items in EconPapers)
JEL-codes: H32 L10 L26 O32 O38 (search for similar items in EconPapers)
Date: 2022-11-22
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