The research tax credit, a controversial instrument

Within a set budget “to the nearest euro” according to the formula of Minister Bruno Le Maire, the research tax credit (CIR), the first tax niche by its amount, could well be the subject of numerous debates in Parliament.

Created in 1983, the CIR has been revised several times to become today a well-established tool in the tax system of French companies. It is an aid to their research and development (R&D) activities. In the 2023 finance bill, it is estimated at 7.43 billion euros for a number of beneficiary companies around 27,000.

An unbalanced device

It is above all the distribution of these funds that is the subject of debate: the 26 largest beneficiary companies thus saved 1.83 billion euros in taxes, or 26% of the total, an amount almost identical to the gain received by SMEs. , who nevertheless represent 83% of the beneficiaries.

Why such a bias in the distribution of public manna? Unlike a subsidy which can be targeted, the CIR is a tax expenditure, that is to say a tax relief, which concerns all taxpayer companies. “It is directly deducted from corporation tax or business income tax,” as indicated by the Business Department of the Ministry of Economy and Finance.

Proportional to total R&D expenditure and not to its increase from one year to the next, unlike what existed before 2006, it mechanically benefits large companies more, especially since its effect is no longer capped since a 2008 reform: 30% tax credit up to 100 million euros of R&D expenditure, 5% beyond that.

“The problem is that this tax expenditure has relatively little knock-on effect in large groups,” emphasizes Xavier Jaravel, professor at the London School of Economics, co-author with Philippe Aghion and Nicolas Chanut of the note from the Economic Analysis Council (CAE) published last month on this subject. One million euros of CIR spent produces on average 2.5 times more patents in SMEs than in large companies.

A reform that has become necessary

Another indicator, the increase in employment as a result of R & D expenditure, gives a similar relationship. This is one of the main reasons why the authors recommend a reform of the system: abolition of any tax credit beyond 100 million, or even lowering this amount to 20 million, in order to distribute the overall envelope over smaller projects, by nature those of SMEs which would thus be better assisted.

“Be careful not to threaten the research of companies”, they say at Afep (French Association of Private Companies), which brings together the 110 largest industrial groups in France. Quoting a report by the National Association for Research and Technology (ANRT), she indicates that, thanks to the CIR, the average cost of a researcher in France is now among the lowest in the OECD, when it would be one of the highest without this device.

The issue, for research, is not in taxation

“The location of research centers and their researchers depends only slightly on corporate taxation. The global scientific environment and the presence of a fabric of innovative companies matter more”, replies Xavier Jaravel, who relies on the same ANRT study.

Especially since, for Philippe Aghion, “Overall corporate taxation has already decreased significantly, France having almost absorbed its differential compared to other Western countries. We are not leading a crusade against large companies but favoring aid for SMEs”.

A windfall effect favorable to large industrial groups for some, the CIR is not disproportionate for Afep: “Large companies account for 44% of research expenditure in France and receive only 26% of the CIR. » As the Economic Analysis Council points out, “the CIR is the most generous of the R&D aid tax schemes in OECD countries, especially for large companies”.

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