Ukraine – Fiscal incentives for science, technology and innovation activities : good practice review report (English)

World Bank

This report reviews different international good practices in introducing and implementing fiscal incentives for supporting science, technology, and innovation (STI) and provides policy recommendations relevant to the implementation of such incentives in Ukraine. It focuses on tax incentives as an indirect financial support mechanism for the private sector's research and development (R&D) and innovation activity. It identifies the costs and benefits of a variety of fiscal incentives (six different regimes) to support STI that have been widely used worldwide. It is important to note that the good practice examples outlined in this report have all been implemented as part of a broader agenda for strengthening the science and technology base of the countries in which they were put in place. Each of the policies, in isolation, would not have been sufficient to achieve the objectives of the government. The report describes the Ukrainian context, focusing on the strengths and weaknesses of Ukraine’s science and technology base, followed by a discussion of the recent developments in its corporate tax system as they relate to the private sector’s R&D and innovation efforts. It also lays out a framework that maps government objectives to the economic justification for intervention in areas related to STI and suggests suitable fiscal incentives that may address some of the market failures discussed in it. The report concludes that Ukraine should invests in capacity building to implement fiscal incentives in the future, which involves developing a suitable skill set within the Ministry of Finance to work on (a) cost-benefit analysis of possible future implementation, (b) reliable data collection on private R&D and innovation efforts, and (c) specialization on evaluating projects related to science, technology, and innovation.

Guceri, Irem; Zolotarev, Andrey P.; Aridi, Anwar. 2017. Ukraine - Fiscal incentives for science, technology and innovation activities : good practice review report (English). Washington, D.C. : World Bank Group.