SUPPORT OF BUSINESS INNOVATION IN THE FORM OF TAX BENEFITS FOR R&D OF ENTREPRENEURS IN SLOVAKIA
Lea Jančičková - University of Economics in Bratislava, Dolnozemská cesta 1, 852 35 Bratislava, Slovakia
Renáta Pakšiová - University of Economics in Bratislava, Dolnozemská cesta 1, 852 35 Bratislava, Slovakia
DOI: https://doi.org/10.31410/Balkans.JETSS.2021.4.1.31-42
Lea Jančičková - University of Economics in Bratislava, Dolnozemská cesta 1, 852 35 Bratislava, Slovakia
Renáta Pakšiová - University of Economics in Bratislava, Dolnozemská cesta 1, 852 35 Bratislava, Slovakia
DOI: https://doi.org/10.31410/Balkans.JETSS.2021.4.1.31-42
Balkans Journal of Emerging Trends in Social Sciences, (2021) , Vol 4, No 1
ISSN: 2620-164X
ISSN: 2620-164X
Abstract: Since 2015, the tax advantage of the R&D of entrepreneurs in Slovakia has been in the form of indirect support of innovation and creativity in companies. It could be a competitive advantage for the entrepreneurs who apply them. They are important on the revenue level, e.g. in the creation of a new product and on the cost level, in streamlining the conduct of business. This article aims to analyze the application of super-deduction in tax due to R&D carried out by entrepreneurs in Slovakia from the first year and focuses on R&D in the Slovak Republic from 2015 to 2018. Theoretical interpretations of R&D in legislative standards at transnational and national levels, different tax policies on innovation and gross domestic spending are defined at the outset. The theoretical background is important from the point of view of understanding the R&D in the conditions of the Slovak Republic, where the following quantitative research is carried out. As the main method of investigation, we used the quantitative analysis and comparison that we use to compare the increasing number of companies that used the R&D cost (expenditure) deduction in the context of legal form in the period considered for the years 2015 to 2018 and the amounts of applied super-deduction for individual types of companies. The performed quantitative analysis shows a weak use of the provided income tax relief in the form of super-deduction of costs in connection with the implementation of R&D by companies in Slovakia, despite the year-on-year growing trend. Due to the relative representation of individual legal forms of entities in Slovakia, according to our research, Limited Liability Companies apply a super-deduction of R&D costs annually in the period under review. The number of these entities is constantly growing, as is the amount of the super-deduction applied. Based on the findings, we can state that the increased percentage deduction rate had a positive effect on the motivation of entrepreneurs to apply incentives.
Keywords: Research, Development, Income tax, Tax super deduction, Creativity.
JEL Classification O32 · L26
REFERENCES
Act No. 595/2003 Coll. Income Tax, as amended.
Akcigit, U., D. Hanley, & N. Serrano-Velarde (2013). Back to basics: Basic research spillovers,
innovation policy, and growth. NBER Working Paper 19473, National Bureau of Economic
Research. https://doi.org/10.1093/restud/rdaa061
Akcigit, U., & S. Stantcheva (2020). Back to basics: Taxation and Innovation: What Do We Know?
NBER Working Paper 2020-70, National Bureau of Economic Research.
Appelt, S. et al. (2016), “R&D Tax Incentives: Evidence on design, incidence and impacts”, OECD
Science, Technology and Industry Policy Papers, No. 32, OECD Publishing, Paris. https://
doi.org/10.1787/5jlr8fldqk7j-en
Bočková, N., & Meluzín, T. (2016). Zpracovatelský průmysl České republiky: Nepřímá podpora
výzkumu a vývoje. Scientific Papers of the University of Pardubice.Series D.Faculty of
Economics and Administration, (36), pp 42-53.
Bockova, N., & Zizlavsky, O. (2016). Innovation and financial performance of company: A study
from Czech manufacturing industry. Transformations in business & economics 15(3) s.
156-175.
Cunningham, P., Gök, A., & Laredo, Ph. (2013). The Impact of Direct Support to R&D and Innovation
in Firms. Nesta Working Paper 13/03.
D’Andria, D., Pontikakis, D., & Skonieczna, A., (2018). Towards a European R&D incentive? An
assessment of R&D provisions under a common corporate tax base. Economics of Innovation
and New Technology 27, 531–550. https://doi.org/10.1080/10438599.2017.1376168
David, P., Hall, B., and Toole, A. (2000). Is public R&D a complement or substitute for private R&D?
A review of the econometric evidence, Research Policy, Volume 29, Issues 4-5, pp. 497–529.
De Simone, L., & Stomberg, B., (2013). Do investors differentially value tax avoidance of income
mobile firms? Working Paper. http://dx.doi.org/10.2139/ssrn.2102903
Financial Administration (2020a). Financial administration. [online]. Retrieved from https://
www.financnasprava.sk/sk/financna-sprava
Financial Administration, (2020b). List of tax subjects who have claimed the deduction of research
and development expenses. Retrieved from https://www.financnasprava.sk/sk/elektronicke-
sluzby/verejne-sluzby/zoznamy/zoznam-danovych-subjektov-kto
Forrest Brown. (2020). R&D tax credits explained. Retrieved from https://forrestbrown.co.uk/
rd-tax-credits-explained/
Huang, J., Krull, L., & Ziedonis, R. (2020). R&D Investments and Tax Incentives: The Role of Intra-
Firm Cross-Border Collaboration. CONTEMPORARY ACCOUNTING RESEARCH
Volume: 37, Issue: 4, Pages: 2523-2557. DOI: 10.1111/1911-3846.12588
Kylliäinen, J. (2018). Measuring Innovation – The Definitive Guide to Innovation Management
KPIs. Viima Solutions Oy. Retrieved from https://www.viima.com/blog/how-to-measure-innovation-
kpis
Macgregor, Pelikánová, R., (2019a). Harmonization of the protection against misleading commercial
practices: ongoing divergences in Central European countries. Oeconomia Copernicana,
10(2), 239–252. DOI: 10.24136/oc.2019.012.
Macgregor, Pelikánová, R. (2019b). R&D expenditure and innovation in the EU and selected
member states. JEMI – Journal of Entrepreneurship, Management and Innovation, 2019,
15(1):13-33. doi: 10.7341/20191511.
MacGregor Pelikánová, R. & MacGregor, R. (2017). European e-Justice Portal – Reality of Electronic
One-Stop-Shop for Publication of Financial Statements in the EU. In: Jindřichovská,
Irena; Kubíčková, Dana. Conference: 5th International Scientific Conference on IFRS -
Global Rules and Local Use (pp: 98-111), Prague, MU.
Melecký, L. (2017). Meta-analyses of composite indices in the evaluation of European Union territory.
In: 20th International Colloquium on Regional Sciences. (pp. 43-51), Brno: Masaryk
University.
Ministry of the Economy. (2013). Research and Innovation Strategy for Smart Specialisation of
the Slovak Republic. Retrieved from https://www.mhsr.sk/uploads/files/81edIx1h.pdf
OECD (2020), Gross domestic spending on R&D (indicator). Retrieved from 10.1787/d8b068b4-
en (Accessed on 24 November 2020)
OECD (2016), OECD Fiscal incentives for R&D and innovation in a diverse world. OECD Publishing,
Paris. Retrieved from https://www.oecd-ilibrary.org/sites/9789264257573-8-en/
index.html?itemId=/content/component/9789264257573-8-en
OECD (2015), OECD Science, Technology and Industry Scoreboard 2015: Innovation for Growth
and Society, OECD Publishing, Paris. Retrieved from https://www.oecd-ilibrary.org/science-
and-technology/oecd-science-technology-and-industry-scoreboard-2015_sti_scoreboard-
2015-en
OECD (2009), OECD Reviews of Innovation Policy: Mexico 2009. OECD Publishing, Paris. Retrieved
from https://www.oecd-ilibrary.org/science-and-technology/oecd-reviews-of-innovation-
policy-mexico-2009_9789264075993-en
PWC Slovakia. (2020) R&D tax super-deduction, Retrieved from https://www.pwc.com/sk/sk/investovanie-
na-slovensku/odpocet-vydavkov.html
Staníčková, M., (2014). Competitiveness Factors in Regional Growth: The Case of Central and
Eastern European Countries . In: 2nd International Conference on European Integration
(ICEI). (pp. 634-643), Ostrava: VSB-Technical University Ostrava.
Turečková, K. & Nevima, J. (2020). The Cost-Benefit Analysis for the Concept of a Smart City:
How to Measure the Efficiency of Smart Solutions? Sustainability, 12(7). https://doi.
org/10.3390/su12072663.
Vetráková, M., (2019). Daňový superodpočet nákladov na výskum a vývoj.
Retrieved from https://www.ako-uctovat.sk/clanok.php?t=Danovy-superodpocet-nakladov-
na-vyskum-a-vyvoj&idc=396
Keywords: Research, Development, Income tax, Tax super deduction, Creativity.
JEL Classification O32 · L26
REFERENCES
Act No. 595/2003 Coll. Income Tax, as amended.
Akcigit, U., D. Hanley, & N. Serrano-Velarde (2013). Back to basics: Basic research spillovers,
innovation policy, and growth. NBER Working Paper 19473, National Bureau of Economic
Research. https://doi.org/10.1093/restud/rdaa061
Akcigit, U., & S. Stantcheva (2020). Back to basics: Taxation and Innovation: What Do We Know?
NBER Working Paper 2020-70, National Bureau of Economic Research.
Appelt, S. et al. (2016), “R&D Tax Incentives: Evidence on design, incidence and impacts”, OECD
Science, Technology and Industry Policy Papers, No. 32, OECD Publishing, Paris. https://
doi.org/10.1787/5jlr8fldqk7j-en
Bočková, N., & Meluzín, T. (2016). Zpracovatelský průmysl České republiky: Nepřímá podpora
výzkumu a vývoje. Scientific Papers of the University of Pardubice.Series D.Faculty of
Economics and Administration, (36), pp 42-53.
Bockova, N., & Zizlavsky, O. (2016). Innovation and financial performance of company: A study
from Czech manufacturing industry. Transformations in business & economics 15(3) s.
156-175.
Cunningham, P., Gök, A., & Laredo, Ph. (2013). The Impact of Direct Support to R&D and Innovation
in Firms. Nesta Working Paper 13/03.
D’Andria, D., Pontikakis, D., & Skonieczna, A., (2018). Towards a European R&D incentive? An
assessment of R&D provisions under a common corporate tax base. Economics of Innovation
and New Technology 27, 531–550. https://doi.org/10.1080/10438599.2017.1376168
David, P., Hall, B., and Toole, A. (2000). Is public R&D a complement or substitute for private R&D?
A review of the econometric evidence, Research Policy, Volume 29, Issues 4-5, pp. 497–529.
De Simone, L., & Stomberg, B., (2013). Do investors differentially value tax avoidance of income
mobile firms? Working Paper. http://dx.doi.org/10.2139/ssrn.2102903
Financial Administration (2020a). Financial administration. [online]. Retrieved from https://
www.financnasprava.sk/sk/financna-sprava
Financial Administration, (2020b). List of tax subjects who have claimed the deduction of research
and development expenses. Retrieved from https://www.financnasprava.sk/sk/elektronicke-
sluzby/verejne-sluzby/zoznamy/zoznam-danovych-subjektov-kto
Forrest Brown. (2020). R&D tax credits explained. Retrieved from https://forrestbrown.co.uk/
rd-tax-credits-explained/
Huang, J., Krull, L., & Ziedonis, R. (2020). R&D Investments and Tax Incentives: The Role of Intra-
Firm Cross-Border Collaboration. CONTEMPORARY ACCOUNTING RESEARCH
Volume: 37, Issue: 4, Pages: 2523-2557. DOI: 10.1111/1911-3846.12588
Kylliäinen, J. (2018). Measuring Innovation – The Definitive Guide to Innovation Management
KPIs. Viima Solutions Oy. Retrieved from https://www.viima.com/blog/how-to-measure-innovation-
kpis
Macgregor, Pelikánová, R., (2019a). Harmonization of the protection against misleading commercial
practices: ongoing divergences in Central European countries. Oeconomia Copernicana,
10(2), 239–252. DOI: 10.24136/oc.2019.012.
Macgregor, Pelikánová, R. (2019b). R&D expenditure and innovation in the EU and selected
member states. JEMI – Journal of Entrepreneurship, Management and Innovation, 2019,
15(1):13-33. doi: 10.7341/20191511.
MacGregor Pelikánová, R. & MacGregor, R. (2017). European e-Justice Portal – Reality of Electronic
One-Stop-Shop for Publication of Financial Statements in the EU. In: Jindřichovská,
Irena; Kubíčková, Dana. Conference: 5th International Scientific Conference on IFRS -
Global Rules and Local Use (pp: 98-111), Prague, MU.
Melecký, L. (2017). Meta-analyses of composite indices in the evaluation of European Union territory.
In: 20th International Colloquium on Regional Sciences. (pp. 43-51), Brno: Masaryk
University.
Ministry of the Economy. (2013). Research and Innovation Strategy for Smart Specialisation of
the Slovak Republic. Retrieved from https://www.mhsr.sk/uploads/files/81edIx1h.pdf
OECD (2020), Gross domestic spending on R&D (indicator). Retrieved from 10.1787/d8b068b4-
en (Accessed on 24 November 2020)
OECD (2016), OECD Fiscal incentives for R&D and innovation in a diverse world. OECD Publishing,
Paris. Retrieved from https://www.oecd-ilibrary.org/sites/9789264257573-8-en/
index.html?itemId=/content/component/9789264257573-8-en
OECD (2015), OECD Science, Technology and Industry Scoreboard 2015: Innovation for Growth
and Society, OECD Publishing, Paris. Retrieved from https://www.oecd-ilibrary.org/science-
and-technology/oecd-science-technology-and-industry-scoreboard-2015_sti_scoreboard-
2015-en
OECD (2009), OECD Reviews of Innovation Policy: Mexico 2009. OECD Publishing, Paris. Retrieved
from https://www.oecd-ilibrary.org/science-and-technology/oecd-reviews-of-innovation-
policy-mexico-2009_9789264075993-en
PWC Slovakia. (2020) R&D tax super-deduction, Retrieved from https://www.pwc.com/sk/sk/investovanie-
na-slovensku/odpocet-vydavkov.html
Staníčková, M., (2014). Competitiveness Factors in Regional Growth: The Case of Central and
Eastern European Countries . In: 2nd International Conference on European Integration
(ICEI). (pp. 634-643), Ostrava: VSB-Technical University Ostrava.
Turečková, K. & Nevima, J. (2020). The Cost-Benefit Analysis for the Concept of a Smart City:
How to Measure the Efficiency of Smart Solutions? Sustainability, 12(7). https://doi.
org/10.3390/su12072663.
Vetráková, M., (2019). Daňový superodpočet nákladov na výskum a vývoj.
Retrieved from https://www.ako-uctovat.sk/clanok.php?t=Danovy-superodpocet-nakladov-
na-vyskum-a-vyvoj&idc=396
| balkans.jetss.2021.4.1.31-42.pdf |
Association of Economists and Managers of the Balkans
- UdEkoM Balkan -
179 Ustanicka St, 11000 Belgrade, Republic of Serbia
E-mail: [email protected]
www.udekom.org.rs
- UdEkoM Balkan -
179 Ustanicka St, 11000 Belgrade, Republic of Serbia
E-mail: [email protected]
www.udekom.org.rs
Tel. +381 62 812 5779
VAT number: 108747027
Registration number.: 28157347
Registration number.: 28157347