Grants and incentives program updates: February 2016 | Deloitte US | Tax has been added to your bookmarks.
Grants and incentives program updates: February 2016
Global developments benefiting business
This monthly publication provides a summary and updates on the latest global developments in research and development (R&D) credits, grants, and other inventive arrangements. More than 50 countries offer specific incentives and this newsletter focuses on identifying and outlining what could be the right incentives for your organization.
- United Kingdom
- United States
- More information
- View archived newsletters
Promotion of EU agricultural products
The European Commission will provide financial assistance to companies in EU member states to break into or consolidate international markets by supporting actions that explain the standard and quality of EU agri-food products to consumers and importers and highlight the specific features of production methods within the European Union.
Qualifying activates include:
- Advertising campaigns (press, television, radio, internet)
- Point-of-sale promotions
- Public relations campaigns
- Participation in exhibitions and fairs, and a range of other activities
- B2B or B2C campaigns
Support will be available for at least one year but no more than three years.
European Investment Bank (EIB)
The EIB is the European Union’s bank, owned by and representing the interests of the EU member states. The EIB supports sustainable investment projects that contribute to furthering EU policy objectives. Services include the following:
Lending: Mainly through the granting of loans, the provision of guarantees, microfinancing, equity investment, etc.
Blending: Unlocking financing from other sources, particularly from the EU budget, then blending that financing with financing from the EIB to form a full financing package
Advising: Administrative and project management assistance to facilitate investment implementation
Railway transport and logistics
The scheme is aimed at encouraging the following:
- Improving the quality of rail services by increasing reliability and punctuality by as much as 50 percent
- Reducing congestion and CO2 emissions by doubling railway capacity
- Cutting the costs of infrastructure and rolling stock by up to half
- Contributing to a shift to attract users to rail. Rail freight will become more cost effective, punctual, and traceable as a shipment option for freight forwarders and shippers
Each of the above objectives will be detailed in one of about 30 individual calls for proposals.
Medical technology, biotechnology, photonics
Light Cares-photonic technologies for handicapped persons
This R&D scheme focuses on cooperation between companies, handicapped persons, and so-called “makers”* to create innovative solutions that improve the daily life of the disabled:
- Tools manufactured with photonic processing (e.g. 3D-printing, laser cutting)
- Tools based on photonic components
The focus of the R&D project should be on open-access solutions that allow for a customization of the developed tools.
*”Maker” is a term used to describe a person who creates and develops innovative tools in his/her free time
Manufacturing, automotive, lightweight
Lightweight concepts for road and railway vehicles
The scheme focuses on the integration of new lightweight components into road and railway vehicles. Innovative lightweight concepts should be developed for the following modules:
- Vehicle body/vehicle structure
- Support structure, including wheel suspension (including chassis)
- Demonstration of the system integration in a prototype is required
With the strong focus on system integration, material development and its production processing are covered by this funding scheme.
Germany/France–security and mobility industry, cities and communities, operators of critical infrastructures
German-French collaboration: New security concepts for urban areas
The scheme focuses on innovative bilateral security concepts to improve civil security in urban areas:
- Innovative security strategies for districts with a quickly changing population, e.g. sharing of best practices on the use of security concepts and models to ensure the inclusion of all relevant actors (e.g. community representatives, residents, representatives of security agencies)
- Innovative security strategies for mobility in urban areas, e.g. using data generated by new mobility concepts, such as car sharing and automated driving
- Innovative security strategies in the event of a break-down of critical infrastructure, e.g. analysis of possible mitigation and emergency treatment strategies using tools provided under the smart city concept
Promoting corporate R&D&I
A benefit is available for SMEs and large companies (either as part of a consortium involving SMEs, or independently but sharing benefits/results with SMEs) implementing R&D&I projects in Central Hungary (Budapest and Pest county). Costs of applied research and experimental development are eligible. Projects must be completed within 24 months.
Individual government decision-based scheme (investment grant)
From 31 December 2015, existing investment grant schemes primarily for large companies are available under more favorable terms. The key changes are:
- Only 50 new jobs (instead of 100) and a minimum of EUR 10 million (instead of EUR 20 million) in eligible expense will qualify investments in Vas, Veszprem, and Zala counties
- The job creation requirement can be met jointly by the aid beneficiary and its supplier(s) (previously, the job creation requirement had to be met by the beneficiary)
Local business tax credit
As from 1 January 2016, the local municipalities are authorized to amend the local business tax rules and allow companies to reduce their local business tax liability by 10 percent of the direct costs of R&D activities performed. (Local business tax is levied by the municipalities at a tax rate of up to 2 percent. The tax base is the net sales revenue, minus various cost items.)
Grant incentives to employers engaged in cyber security
A payroll-related incentive is offered by the Office of the Prime Minister to a corporation or partnership undertaking R&D in cyber security or the provision of protection and performance of cyber defence services. The incentive will offer entities within Beersheba’s Kiryat Cyber district grant funding to support the employment of one or more employees that specialize in the relevant cyber activities.
Innovative technology to address challenges in the public sector
This program will support projects aimed at improving the quality of service provided by government ministries or public bodies. The program will award grants to projects in two stages:
Pre-R&D projects: Activities can include the design, assembly, and testing of a model/prototype of the idea to demonstrate technological feasibility.
R&D projects: The project may include an element of a trial, demo, or feasibility of the product or service.
Projects should focus on domain challenges in health and digital health, increasing access, connection and operation of various types of databases, digital education, knowledge transfers between public bodies, providing access to information, public procurement optimization, etc.
Grants for employment of workers from the Ethiopian ethnic minority
This grant is for companies in Israel that recently have employed, or plan to employ, Ethiopian ethnic minorities in higher level positions. The grant aims to increase vocational guidance, provide vouchers for vocational training, and financial incentives to employ Ethiopian ethnic minorities in high paying and academic positions.
Extension of royalties exemptions for traditional industry sector
Companies that are funded by grants from the Office of the Chief Scientist (OCS) must repay the grants in the form of a royalty, at a rate of 3 percent to 5 percent, once revenue is generated. A royalty exemption was granted to SMEs and factories in “traditional industries” (i.e. those outside of advanced technology), that was due to expire at the end of 2015 has been extended to the end of 2016. The exemption will continue to be awarded to SMEs that recently commenced R&D activities. Companies must be approved by the research committee as traditional technology industry projects.
New policy for processing applications to employ foreign experts
This policy targets employers that request work approval for a foreign expert/certified specialist and will have the effect of ensuring that the tax rate imposed on the income of the certified foreign expert will not exceed 25 percent.
Establishing a capital fund to invest in SMEs
This scheme is aimed at providing funding for companies that have annual revenues between NIS 10 million and NIS 100 million. Entities are eligible for funding for all expenses, except property acquisitions and financing.
Stability Law 2016–140 percent super deduction
The Stability Law encourages investment in new capital goods by providing an accelerated rate of depreciation for manufacturing equipment. For certain machinery and equipment purchased between 15 October 2015 and 31 December 2016, depreciation can be claimed at a rate of 40 percent.
Stability Law 2016–tax credit for investment in Southern Italy
A tax credit is granted to companies owning a plant in certain areas of the southern regions of Italy (Campania, Puglia, Basilicata, Calabria, Sicily, Molise, Sardinia, and Abruzzo) that purchase new capital goods and manufacturing facilities between 1 January 2016 and 31 December 2019.
Portugal 2020–business innovation and entrepreneurship
Support for projects promoted by non-SMEs or SMEs in all economic activities, particularly those aimed at the production of tradable and exportable goods and services that fulfil the following objectives: (i) strengthen non-SME and SME investments in innovative activities; (ii) contribute to the internationalization of the Portuguese economy, the creation of qualified employment, and the spill-over effect on SMEs; and (iii) promote qualified and creative entrepreneurship.
Incentives for technology R&D (Individual demonstration projects)
Support at rates ranging from 25 percent to 80 percent for individual demonstration projects (IDP) promoted by companies, provided the following conditions are satisfied:
- The IDP concerns advanced technologies and pilot lines
- The IDP falls within the scope of the priority areas of the national and/or regional R&I strategy for a smart specialisation
- The IDP has an eligible investment amount of at least EUR 150,000, among others.
Incentives for technology R&D (Co-promotion demonstration projects)
Support at rates ranging from 25 percent to 80 percent for co-promotion demonstration projects (CDP) promoted by companies and/or research and knowledge dissemination organizations provided the following conditions are satisfied:
- The CDP is engaged in advanced technologies and pilot lines
- The CDP is within the scope of the priority areas of the national and/or regional R&I strategy for a smart specialzation
- The CDP has an eligible investment amount of at least EUR 150,000, among others.
Incentives for technology R&D (Co-promotion projects)
Support at rates ranging from 25 percent to 80 percent for co-promotion projects (CP) promoted by companies and research and knowledge dissemination organizations provided the following conditions are satisfied:
- The CP falls within the scope of the priority areas of the national and/or regional R&I strategy for a smart specialzation
- The CP has an eligible investment amount of at least EUR 150,000
- The leader of the consortium provides at least 30 percent of the eligible investment, among others.
Board of Investment (BOI) measure to accelerate investment
Projects where applications for a corporate income tax exemption are submitted between 1 January 2014 and 30 June 2016 can enjoy an additional exemption of one to four years (subject to an overall cap of eight years when combined with existing corporate income tax exemptions). Projects that already benefit from an eight-year exemption also can claim a 50 percent reduction of corporate income tax for five years following the expiration of the eight-year period.
The project must commence operations by 2017, but may not have generated revenue before 16 November 2015. The number of years of the additional corporate income tax exemption will depend on the actual investment made by the promoted project. BOI promoted projects generally require a minimum of THB 1 million investment (excluding land and the cost of working capital).
Additional eligible activities for investment promotion
Six additional activities have been added to the Board of Investment’s list of eligible activities for investment promotion:
- Manufacture of animal food or animal food ingredients
- Manufacture of construction materials and manufacture of pre-stressed concrete for public utilities (except for the manufacture of ceramic roof tiles and floor or wall tiles)
- Manufacture of chemical substances for cleansing such as soap, shampoo, and toothpaste (except for cosmetics)
- Manufacture of plastic products for consumer goods such as plastic containers
- Manufacture of goods made from pulp or paper such as paper boxes
- Building development for industrial factories and/or Cargoes
The project must be located in a Special Economic Development Zone. Tax incentives include an eight-year corporate income tax exemption and an exemption from import duty on machinery and on raw and essential materials used in the production of products for export.
BOI promoted projects generally require a minimum of THB 1 million investment (excluding land and the cost of working capital).
APC5: Driving UK productivity through low carbon propulsion innovation
Funding is available on a competitive basis to support collaborative R&D projects that focus on the development of low carbon, low emission automotive propulsion technologies. Projects must demonstrate the development of technologies based on one or more of the following technology areas:
- Internal combustion engines
- Lightweight vehicle and powertrain structures
- Electric machines and power electronics
- Energy storage and energy management
- Alternative propulsion systems
The aim of the scheme is to develop on-vehicle technologies for on- or off-road vehicles. Technologies that primarily reside off the vehicle, such as charging infrastructure, are outside the scope of the scheme.
It is expected that the majority of the technologies will have achieved Technology Readiness Level 5 (TRL5) or higher and Manufacturing Readiness Level 4 (MRL4) or higher before the start of the project. Projects should aim to advance the technologies to TRL8 and MRL6.
Proposals must be collaborative and be led by a UK-based business organization. Consortia must include at least one vehicle manufacturer or Tier 1 supplier and a SME. Projects are expected to be split between industrial research and experimental development, in which a business partner generally will attract up to 50 percent public funding for the project costs depending on the level of R&D involved (70 percent for small companies and 60 percent for medium-sized companies). Projects are expected to last between 18 and 42 months. Project costs should range in size from GBP 5 million to GBP 40 million, although projects outside these ranges will be considered.
The Texas comptroller of public accounts has adopted a new rule to implement the sales and use tax exemption and franchise tax credit available for qualified R&D activities as defined under Internal Revenue Code section 41. Taxpayers that carry out qualifying R&D activities in Texas have the option of claiming a sales or use tax exemption or a franchise tax credit.
California Competes Tax Credit–Third application period
The California Competes Tax Credit (CCTC) is an income tax credit available to businesses that create or retain jobs in California. Since 2014, the governor’s Office of Business and Economic Development (GO-Biz) has awarded USD 223 million to 330 companies projected to create over 42,000 jobs and USD 9.6 billion in investments. For fiscal year 2015/2016, USD 43.7 of the USD 200.9 million available in tax credits was awarded to 89 companies in application period 1.
Connecticut enacts tax law changes
Connecticut offers two separate tax credits against the Corporation Business Tax for taxpayers with qualified R&D expenditure (QRE) incurred in the state. The non-incremental R&D tax credit is based on the total amount of QREs incurred in CT during the tax year and ranges from 1 percent to 6 percent of QREs incurred in the state. The incremental R&D credit is equal to 20 percent of incremental QREs incurred in the state over a base amount.
A taxpayer that claims a nonincremental credit for any income year must reduce the amount of QREs by the amount of excess QREs, as computed for the Incremental R&D credit.
Federal government enacts legislation to extend employee hiring credits
On 18 December 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which includes the following modifications to current law:
- Extension of the Work Opportunity Tax Credit (WOTC) through 31 December 2019
- A new target group added to the WOTC consisting of qualified long-term unemployment recipients
- Extension of the Empowerment Zone (EZ) hiring incentives and the Indian Employment Tax Credit (IETC) through 31 December 2016
The above changes are effective retroactively to 31 December 2014.
For more information
For more information on any of the programs listed above, please contact the in-country representative or your usual contact.
Subscribe to receive Grants and Incentives Program Updates directly via email.