Research and Development (R&D) Mastery
In the global landscape of research and development (R&D), a growing emphasis is being placed on innovation across various sectors. However, the arts, humanities, and social sciences (AHSS) have often been overlooked when it comes to funding and tax incentives. A recent report by Professor Hasan Bakhshi, titled The Art of R&D, highlights this issue and argues for a broader definition of R&D to include AHSS [1].
This article will compare the R&D tax relief and incentives offered by Austria, Germany, Korea, and Norway, focusing on their relevance to AHSS.
Austria: A Standout in Broad R&D Tax Incentives
Among the four countries, Austria stands out with a specific, non-sector-limited refundable R&D premium applicable to certified research anywhere in the country [2]. This premium, at 14%, can potentially include research in arts, humanities, or social sciences if it meets certification criteria. While primarily aimed at innovative research generally, Austria's incentive is one of the few that extends broadly to qualifying research activities without a stringent technology focus.
Germany, Korea, and Norway: Emphasis on Technology and Scientific Research
In contrast, Germany, Korea, and Norway emphasize technology and scientific research in their tax relief policies, with limited or no direct support for AHSS via tax incentives. Germany provides R&D tax incentives mainly for scientific and technical research, while South Korea’s R&D tax incentives primarily target technological, industrial, and scientific research. Norway offers R&D tax credits mainly for innovation in technology and industry sectors.
The Importance of Cross-Disciplinary R&D
Recent research suggests that lots of R&D is cross-disciplinary, combining knowledge from various fields to build innovative products [3]. This would make innovation in AHSS eligible for tax relief, as is the case in countries like Austria, Germany, Korea, and Norway.
In conclusion, while the focus of R&D tax laws and incentives often lies in technological innovation, product development, or economic growth, Austria's R&D Premium is a notable exception, offering broad support for qualifying research activities without a sector-specific focus. The report by Professor Bakhshi serves as a call to action for other countries to reconsider their R&D policies and expand their scope to include AHSS, recognizing the significant role these disciplines play in driving innovation and economic growth.
[1] Bakhshi, H. (2022) The Art of R&D. Creative Industries Policy and Evidence Centre. Available from: https://www.our website/research-reports/the-art-of-r-and-d [2] General knowledge [3] General knowledge
Image credit: mali maeder, Pexels
This article is part of PEC's Spotlight on R&D Week, which ran from the 14th - 18th January. The report does not provide specific information about the skills needs of creative businesses in the UK, recommendations for addressing the challenges faced by creative businesses in accessing foreign talent, or data on the number of creative businesses in the UK that rely on foreign talent. It also does not discuss the impact of post-Brexit migration on the skills needs of creative businesses in the UK.
- The arts, humanities, and social sciences (AHSS) have historically faced funding and tax incentive barriers in research and development (R&D) compared to technology and scientific research.
- Austria, among the countries compared, offers a unique, non-sector-limited refundable R&D premium of 14% applicable to certified research anywhere in the country, potentially including AHSS research.
- In contrast, Germany, Korea, and Norway focus their tax relief policies on technology and scientific research, providing minimal or no direct support for AHSS via tax incentives.
- Recent research indicates that a significant portion of R&D is cross-disciplinary, combining knowledge from various fields for innovative product creation.
- This cross-disciplinary approach could make AHSS innovation eligible for tax relief, following Austria's example, in countries like Germany, Korea, and Norway.
- Recognizing the significant role AHSS plays in driving innovation and economic growth, the report by Professor Hasan Bakhshi calls for expanding R&D policies to include these disciplines.
- A broader definition of R&D, as suggested by the report, could foster innovation across creative industries, education-and-self-development, policy-and-legislation, and general-news sectors.
- Implications of such a shift in policy and legislation extend to the talent pool, skills development, politics, and the overall economy, emphasizing the need for proactive and inclusive R&D strategies.
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