Corporate Tax Statistics 2026

Governments widely use tax incentives to encourage business investment in research and development (R&D) and innovation. Over recent decades, R&D tax incentives have become a central element of innovation policy in many jurisdictions, complementing direct support measures such as grants and government procurement of R&D services.

Expenditure-based tax incentives provide relief based on eligible R&D expenditures — such as enhanced deductions or tax credits for qualifying outlays — while income-based tax incentives seek to reduce the taxation of income arising from qualifying intangible assets resulting from R&D and related activities. They do so by applying a preferential tax rate to income derived from certain types of R&D-related intangibles. Income-based support may be targeted solely to income from intellectual property (IP) assets or may extend to both IP income and certain other forms of non-IP income under dual category regimes.

This chapter presents internationally comparable indicators on expenditure-based and income-based tax incentives included in the OECD Corporate Tax Statistics database. These indicators, developed by the OECD Centre for Tax Policy and Administration (CTPA) in collaboration with the OECD Directorate for Science, Technology and Innovation (DSTI), capture the implied generosity of R&D tax relief provisions, which vary significantly across jurisdictions in their design, eligibility criteria and treatment of loss-making firms. The income-based indicators cover IP and dual category regimes and provide insights into the design of tax incentives for innovation-related income. Taken together, these measures support the analysis of how tax systems incentivise R&D and innovation across jurisdictions and over time.

The Corporate Tax Statistics database incorporates two sets of R&D tax incentives indicators that offer a complementary view of the extent of R&D tax support provided through expenditure-based R&D tax incentives. A third set of indicators focus on income-based R&D tax incentives.

The first set of indicators reflects the cost of expenditure-based tax incentives to the government:

• Government tax relief for business R&D (GTARD) includes estimates of foregone revenue (and refundable amounts) from national and subnational incentives, where applicable and relevant data are available. This indicator is complemented with figures on direct funding of business R&D to provide a more complete picture of total government support to business R&D investment. Both indicators, compiled by the OECD DSTI, are available for 46 jurisdictions – all OECD jurisdictions and 8 partner economies – for the period 2000-2024.

The second set of indicators are synthetic tax policy indicators that capture the effect of expenditure-based R&D tax incentives on firms’ investment costs. These indicators are available for 55 jurisdictions, including all OECD members for the period 2019-2025.

• The EATR for R&D measures the impact of taxes on R&D investments earning an economic profit.

• The user cost of capital for R&D measures the return that a firm needs to realise on an R&D investment before tax to offset all costs and taxes that arise from the investment, making zero economic profit.

• Implied marginal tax subsidy rates for R&D, calculated as 1 minus the B-Index, reflect the design and implied generosity of R&D tax incentives to firms for an extra unit of R&D outlay. The B-Index, available for the period 2000-25, captures the extent to which different tax systems reduce the effective cost of R&D.

The third set of indicators are also synthetic tax policy indicators but they capture the effect of income-based R&D tax incentives on firms’ investment costs. These indicators are available for 55 jurisdictions, including all OECD members for the period 2000-2025.

• The EATR and the user cost of capital for R&D incorporating income-based tax incentives.

The indicators of EATRs and cost of capital for R&D in this chapter extend the corporate ETRs shown in the previous chapter to include internally generated R&D assets, i.e., those that are the result of a firms’ own R&D.1 These indicators, jointly developed by the OECD CTPA and the OECD DSTI, refer to large businesses who are able to fully utilise their tax benefits. Large companies account for the bulk of the R&D in most OECD countries (OECD, 2025[1]; Dernis et al., 2019[2]). The B-Index, by contrast, covers a wider range of firm scenarios (SMEs; large firms; profit and loss-making).

Indicators of government tax relief for business R&D combined with data on direct R&D funding provide a holistic picture of governments’ efforts to support business expenditure on R&D (BERD). Together, these indicators facilitate the cross-jurisdiction comparison of the policy mix provided by governments to support R&D and the monitoring of any changes over time.

Iceland, Portugal and France provided the largest levels of support in 2024 (Figure 5.1.). Subnational R&D tax incentives accounted for 25% and 21% of total tax support in Canada and Hungary in 2024, while playing a much smaller role in Japan (0.2%). Most jurisdictions integrate both direct and indirect forms of R&D support in their policy mix, but to different degrees. In 2024, 21 OECD jurisdictions offered more than 50% of government support for business R&D through the tax system, and this percentage reached 75% or more in six OECD jurisdictions: Australia, Belgium, Colombia, Ireland, Lithuania and Portugal. Five OECD jurisdictions relied solely on direct support in 2024. These are Costa Rica, Israel, Latvia, Luxembourg and Switzerland.

Comparing the EATRs for R&D investments across jurisdictions including expenditure-based tax incentives provided by the tax system for the location of profitable R&D investments (Figure 5.2, Panel A). The lowest EATRs for R&D investments carried out by large firms are observed in Ireland, Poland and Lithuania, while the highest EATRs for R&D are observed in Argentina, Costa Rica and Colombia. Estimates of the EATR are typically lower for jurisdictions with lower STRs or more generous provisions affecting the tax base, including both standard tax provisions and those specific to R&D investments.

To assess the preferential tax treatment for R&D investments in relation to other investments, it is useful to calculate the EATR for a comparable investment to which expenditure-based R&D tax incentives do not apply. Where available, expenditure-based R&D tax incentives decrease the effective cost of R&D and reduce firms’ EATRs, as shown in Panel A by the fact that the diamonds lie lower than the circles. The extent of the reduction, shown in Figure 5.2 Panel B, is explained by the generosity of the expenditure-based R&D tax incentives in each jurisdiction, which is closely linked to the design of these provisions. This figure includes only the impact of tax provisions in supporting R&D: modest reductions, as in Sweden or the United States, may reflect a higher reliance on direct forms of government support for R&D.

By taking the difference between the two EATRs, it is possible to gauge the preferential expenditure-based tax treatment offered to R&D in a given jurisdiction, in isolation from baseline tax provisions available to all types of investments. Within each country, Poland offers the most generous preferential tax treatment for R&D investments, followed by Lithuania and Portugal. The absence of bars, as in Costa Rica or Luxembourg, indicates that no preferential expenditure-based tax treatment for R&D is available in the jurisdiction relative to other investment types.

Once established in a given location, firms decide upon the level of investment with reference to tax provisions that affect the intensive margin. The cost of capital for R&D is one relevant indicator of tax incentives at the intensive margin (see Figure 5.3). Across the jurisdictions considered Portugal, Poland and Peru are the jurisdictions providing greater incentives through the tax system to increase the volume of R&D. Among jurisdictions offering R&D tax support, estimates of the cost of capital for R&D are highest in Denmark, Korea and Mexico. Estimates of the cost of capital for R&D capture both the variability in standard tax provisions and those specific to R&D investments. R&D tax incentives reduce the cost of capital, with the extent of the reduction being affected by the generosity of R&D tax incentives. The absolute difference between the cost of capital for an R&D investment and a comparable non-R&D investment provides a within-country indication of the magnitude of R&D tax relief to marginal R&D investments, net of the standard tax treatment available to all investments. This allows the preferential tax treatment for R&D to be isolated. The largest reductions in the cost of capital for R&D investments are observed in Portugal, Poland and Peru, which are among the jurisdictions with the lowest cost of capital estimates.

R&D tax benefits may vary with business characteristics such as firm size and profitability. Implied marginal tax subsidy rates for R&D, based on the B-Index indicator (1-B-Index), provide a synthetic indicator of the expected generosity of the tax system towards an extra unit of a firm’s R&D investment (Figure 5.4). The more generous the R&D tax incentive is, the greater the value of the implied tax subsidy. This indicator shows differences in tax benefits between large and SMEs and firms in profit and loss-making positions. In jurisdictions, such as Australia or Canada, that offer enhanced tax relief provisions for SMEs that are not available to large firms, the indicator shows the difference in the implied subsidies offered to each firm type.

Refunds and carry-over provisions are common means of promoting R&D in firms that would not otherwise be able to utilise the support provided by the tax system. This may arise when firms do not have sufficient tax liability to offset earned deductions or do not draw a profit. Implied marginal subsidy rates are calculated under two scenarios: profitable firms (which are able to fully utilise the tax support available to them) and loss-making firms (which may not be able to fully utilise the tax support available to them) to reflect the varying impact of these provisions. Refundability provisions such as those available in Austria and Norway align the subsidy for profitable and loss-making firms. Compared to refunds, carry-over provisions, such as those available in Spain or Portugal, imply a lower subsidy for loss-making firms compared to profitable firms as the benefits may only be used in the future. In jurisdictions where no such provisions exist, such as Brazil or Japan, loss-making firms experience a full loss of tax benefits.

Income-based tax incentives for R&D and innovation feature in the policy mix of many OECD and IF member countries. In 2025, 21 out of 38 OECD countries offer income-based tax incentives to R&D and innovation, representing a substantial increase from 4 countries in 2000. With the exception of Luxembourg, all of these countries offer income-based tax incentives together with expenditure-based tax incentives outlined in the previous section such as R&D tax credits.

This section develops EATRs for an investment in an internally generated R&D intangible asset including income-based tax incentives. This indicator provides insights into the role of income-based tax incentives in affecting the location of the intangible profitable R&D investments.

At the sample average, income-based tax incentives reduce the overall tax liability that the firm faces on an R&D investment substantially, with significant variation across countries (see Figure 5.5). EATRs fall from an average of EATR of 19.7% without support to an EATR of 12.1% including income-based tax incentives. Income-based tax incentives imply a reduction in the EATR by 7.6 percentage points on average, or a reduction of 39%.

The EATR for an income-tax-incentive-supported internally generated R&D investment intangible asset ranges from -9% to 31% across the countries considered. In the absence of income-based support the rates would vary from 8% to 31%. Among the countries considered, the lowest EATRs are observed in Malta, Israel and India, while the highest rates are observed in Brazil, Germany and Colombia. Countries with the lowest EATR tend to offer the greatest tax-related incentives to investments in internally generated intangibles.

This section develops the cost of capital for an investment in an internally generated R&D intangible asset, providing insights into the intensive margin of investment decisions. Unlike EATRs, the cost of capital captures how income-based tax incentives affect the scale of marginal R&D investment within a given location. Figure 5.6 shows that such incentives reduce the cost of capital for R&D investments slightly, with R&D projects facing costs of 3.8% compared to 4.2% for non‑R&D investments, implying a modest average reduction of 0.4 p.p. Compared to expenditure-based tax incentives, this shows that income-based tax incentives play a much smaller role in incentivising R&D investments at the margin.

There is substantial variation across countries. The largest reductions are observed in Malta, India and Israel, where preferential regimes significantly lower marginal investment costs, while in many jurisdictions the cost of capital is unchanged, indicating no preferential treatment at the margin. Overall, the cost of capital for R&D investments ranges from 0.9% to 5.1%, whereas non‑R&D costs are tightly clustered around 4.1 to 4.3%.

The EATR for R&D including expenditure-based tax incentives has modestly declined over time and while preferential tax treatment has increased compared to 2019, recent years show signs of stabilisation and even small declines in recent years. Figure 5.7 displays average changes to the EATR over time. Consistent with the trends outlined in the baseline effective average tax rate (EATR) (Chapter 4), the EATR in the absence of R&D tax incentives have tended to modestly decline over the period covered. A similar but more substantial trend is observable for the EATR once expenditure-based R&D tax incentives are included. The EATR for R&D declined from an average of 15.3% in 2019 to 13.8% in 2020 increasing slightly to 14.0% in 2025. Changes over time in the EATR for R&D are due to first time introductions of expenditure-based incentives (Germany and Denmark in 2020, Finland 2021 or Cyprus in 2022) or changes to the generosity of R&D tax incentives (the Slovak Republic in 2020 and 2022, Italy in 2021 or Poland in 2022). In 2025, expenditure-based R&D tax incentives reduce the average EATR by 34.8%, from 21.5% to 14.0%. Over time, preferential tax treatment has increased between 2019 and 2020 and remained relatively stable between 2020 and 2025.

Tax incentives significantly reduce the cost of capital for R&D and while preferential tax treatment has increased since 2019, recent years show a more stable trend. Figure 5.8 compares the evolution of the cost of R&D capital during the period 2019-2025. Similar to the EATR, the cost of capital is affected by changes in the availability of R&D tax incentives and their design. The cost of R&D capital showed a significant decline from an average of 0.6% in 2019 to 0.2% in 2020. Since 2020, implied tax subsidies have remained relatively stable, with slight decreases in 2022 and 2023 followed by a modest increase in 2025. Tax incentives reduced the cost of R&D capital by 92% in 2024 and by 95% in 2025.

R&D tax incentives are, on average, more generous for SMEs and profit-making firms. Figure 5.9 offers an overview of the evolution of implied marginal tax subsidy rates across four categories of firms over the period 2000-2025: SMEs and large firms, each in profit or loss. The generosity of expenditure-based R&D tax incentives rises over time for all firm types. Although between 2013 and 2019 subsidy rates had stabilised, a marked step increase is observed in 2020.

In the most recent years, the data suggest a temporary dip following the 2020 peak in the generosity of support—particularly between 2021 and 2023—followed by a moderate recovery through 2024 and 2025, rather than a sustained decline. Over the entire period, subsidy rates remain consistently higher for SMEs than for large firms under both profit scenarios, and higher for profit-making firms than for loss-making firms across both size classes. This pattern indicates that jurisdictions systematically provide more generous tax support to SMEs and to firms able to benefit immediately from tax relief.

The evolution of the data depicted in Figure 5.9 also reflects heterogeneity in the magnitude of year-on-year changes. The largest increases in implied marginal tax subsidy rates occurred between 2007-2008, at the time of the financial crisis, (an increase of 2.0 p.p. throughout all four categories) and 2019-2020 (2.4 p.p. on average), at the time of the COVID pandemic.

The average taxation of internally generated R&D assets has continuously declined over the past two decades, and increasingly so when income-based tax incentives are taken into account. As shown in Figure 5.10, the average EATR on internally generated R&D intangibles has fallen in the OECD area from 23.5% in 2000 to 12.4% in 2025. The decline stabilises after 2019 and has only been temporarily reversed in three instances; once in 2016 coinciding with the introduction of the BEPS Action 5 minimum standard and in 2022 due to the repeal of an income-based tax incentive in Italy. These trends have to be interpreted in the context of the global fall in STRs, that has led to a reduced taxation of profitable intangible investments even in the absence of income-based tax incentives (Devereux et al., 2002[4]; OECD, 2020[5]). For R&D intangibles that do not benefit from income-based tax incentives, the EATR for OECD countries has fallen from 26.6% in 2000 to 19.8% in 2025, driven by the drop in STRs, new introductions (e.g., Japan in 2025) and increases in generosity (e.g., Greece in 2025). Across all 55 countries in the sample, the EATR has fallen from 26.8% in 2000 to 19.5% in 2025. In principle, lower levels of standard taxation could reduce incentives for governments to introduce income-based tax incentives, as the difference between standard and preferential taxation becomes smaller.

Despite falling EATRs under standard taxation, the extent of tax benefits provided to internally generated R&D intangibles has increased on average over time. The blue bars in Figure 5.10 display the average implicit tax subsidy granted through Income-based tax incentives as measured by the difference between the average EATR for internally generated R&D intangibles under standard taxation and in the presence of income-based tax incentives. The size of the blue bar continues to grow over time even following the introduction of the BEPS Action 5 minimum standard in 2015, but at a slower pace, plateauing after 2019.

Figure 5.11 shows that while income-based tax incentives have substantially reduced EATRs, they have had much more limited impacts on the cost of capital, which has not declined as sharply over recent years. Expenditure-based tax incentives contribute to lowering the cost of capital in a more direct fashion by affecting the cost of investment. The effect of income-based tax incentives in lowering the cost of capital is indirect as they do not affect directly the cost of investing but lower the taxation of future profits. In 2025, income-based tax incentives decreased the cost of capital in OECD countries on average by 0.3 percentage points to an average of 3.9%. The trend over time in the cost of capital for R&D intangible assets has remained relatively stable. Qualifying investments do not enjoy a substantially more preferential treatment compared to other investments.

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[7] González Cabral, A., S. Appelt and T. Hanappi (2021), “Corporate effective tax rates for R&D: The case of expenditure-based R&D tax incentives”, OECD Taxation Working Papers, No. 54, OECD Publishing, Paris, https://doi.org/10.1787/ff9a104f-en.

[8] González Cabral, A. et al. (2023), “Effective tax rates for R&D intangibles”, OECD Taxation Working Papers, No. 63, OECD Publishing, Paris, https://doi.org/10.1787/191dad43-en.

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