Firms of All Sizes Benefit From R&D Tax Credits, and in Portugal Small Firms Benefit Most of All

Source: Rita Bessone Basto, Ana Martins, and Guida Nogueira, “The Impact of R&D tax incentives in Portugal,” GEE Paper 158, Office for Strategy and Studies, Ministry of Economy and Digital Transition, January 2021.

Commentary: Countries around the world have put in place generous R&D tax incentives, not only to boost R&D spending, but also to spur industrial competitiveness. A large array of studies demonstrates the effectiveness of these incentives on spurring business R&D. One recent evaluation of Portugal’s R&D tax credit found that it is effective not only in spurring more R&D, but also in leading firms to hire more researchers, and in increasing exports. And while all firms of sizes benefited, small firms benefited the most.