Aimed at stimulating R&D investment in the private sector, the R.O.C. the government has implemented several tax schemes to provide incentives to firms which engage in R&D activities. However, there has been concern about the effectiveness of the policy tools.
This study conducted a survey on the electrical component industry in order to evaluate the effectiveness of the R&D promotion tax schemes. In the empirical study, our analysis suggests that the tax schemes did generate a certain impact on firms’ R&D investment. In addition, among the schemes, the most encouraging tool is the tax investment credit, and is followed by the tariff reduction for importing R&D equipment and instruments, and this is then followed by the accelerated depreciation scheme for R&D equipment.
Furthermore, we also found that there exists a positive linkage between firms’ R&D expenditure and output. This certainly provides a persuasive reason for the government to implement policy tools to stimulate civil R&D.
