Of interest to clients with offshore operations is what Governments in other countries offer by way of incentive to undertake R&D activities. Many Australian companies have significant foreign subsidiaries, particularly in the Asia-Pacific region, which may be eligible for taxation or funding relief in their host country rather than in Australia. Claimants who satisfy both residency and activity criteria outside of Australia might then benefit from R&D expenditure incurred in those jurisdictions.
While technical compliance obviously differs between countries, the principal tax incentives available around the Asia-Pacific region should be noted since it may influence how a multinational corporate group is structured.
Compared to Australia’s 40% or 45% (depending on turnover level) tax offset, the highlights of some chosen countries’ R&D incentives are:-
- Hong Kong, 100% immediate tax deduction.
- New Zealand, 100% immediate tax deduction.
- Philippines, 100% immediate tax deduction plus potential tax holiday for registered entities.
- China, 150% superdeduction plus potential corporate tax rate reduction to 15%.
- Malaysia, 200% tax deduction when in-house.
- Thailand, 200% tax deduction for expenditure to approved researchers.
- Singapore, up to 400% tax deduction.
- Indonesia, no direct incentive.
- Vietnam, lower or even zero tax rate, conditional.
- Taiwan, 15% of expenditure becomes tax credit but subject to limit.
- South Korea, conditional 20% or 30% tax credit.
- Japan, 40% tax credit.
Eundo assists clients to navigate every stage of their R&D claim with all services performed by highly qualified and registered tax practitioners.
