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Evaluation of the Norwegian R&D Tax Credit Scheme

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Author(s): Ådne Cappelen | Erik Fjærli | Torbjørn Hægeland | Frank Foyn | Jarle Møen | Arvid Raknerud | Marina Rybalka

Journal: Journal of Technology Management & Innovation
ISSN 0718-2724

Volume: 5;
Issue: 3;
Start page: 96;
Date: 2010;
Original page

Keywords: R&D tax credit | R&D subsidies | Innovation policy | Norway

ABSTRACT
We find that the Norwegian R&D tax credit scheme introduced in 2002 mainly works as intended. The scheme is cost-effective and it is used by a large number of firms. It stimulates these firms to invest more in R&D, and, in particular, the effect is positive for small firms with little R&D experience. The returns on the R&D investments supported by the scheme are positive and generally not different from the returns to other R&D investments. We have found examples of what can be interpreted as tax motivated adjustments to the scheme, but to some extent this must be accepted as a cost to subsidy and support schemes intended for use by a large number of economic agents. This is particularly so when attempts are made to keep administrative expenditures and control routines at a low level.
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