New research and development tax incentives announced by the Government earlier this morning are an encouraging start to help lift productivity for business in New Zealand, says the EMA.
New Zealand’s research and development (R&D) investment levels are about half of the OECD average, with investment in innovation and new technology identified as a key driver of increased productivity. New Zealand also lags OECD equivalents in its productivity from the work force.
EMA chief executive Kim Campbell says the new scheme also reflects a partnership approach between Government and business, with the original proposals being significantly modified to reflect feedback from the business community.
“Business has been listened to in regard to the help it needs to innovate, resulting in good public policy on tax incentives, says Mr Campbell.
The new R&D tax incentive scheme proposed to be introduced on April 1 next year matches the EMA’s submission on behalf of its 8500 members with a lift in the incentive and lowering of the expenditure threshold.
We are especially pleased with these aspects of the coming R&D Tax Incentive legislation:
– A credit rate of 15 per cent, up from the earlier proposed 12.5 per cent;
– A minimum R&D expenditure threshold of $50,000 per year;
– A more user-friendly definition of R&D that ensures the credit can be accessed more easily across all sectors, including the technology sector;
– Small business in particular will know in advance of conducting R&D that their application for the tax incentive has been approved, rather than waiting on the outcome of their tax claims at the end of the year.
Mr Campbell says, “These key aspects of the scheme are close to what we believe will encourage more R&D in New Zealand firms.
“As a country we suffer on the global stage from a lack of innovation in our products and services and business practices. New Zealanders have a low spend on the R&D needed for innovation, compared to other OECD members.
“The scheme will encourage new business development, more employment, higher wages and GDP growth,” Mr Campbell says.