Designing R&D Incentives in Hong Kong
22 Pages Posted: 31 Jan 2019
Date Written: January 23, 2019
Abstract
The Hong Kong government has recently enacted legislation granting tax benefits for R&D expenses to boost investment in R&D in Hong Kong. This Article analyzes what would be the optimal design of R&D incentives in Hong Kong, and concludes that the new tax benefits for R&D are unlikely to increase R&D investment in Hong Kong in the most cost-effective manner. The Hong Kong government should consider replacing these tax benefits with other, more effective R&D subsidies.
Keywords: R&D Incentives, Innovation, Research and Development, R&D, Tax Benefits, Super Deduction, Tax Credit, Subsidy, Hong Kong
JEL Classification: K34, O31, O38
Suggested Citation: Suggested Citation