• Automobile industry also is entitled to a 150% deduction for expenditures on in-house R&D facilities.

Mashelkar, Director General, Council for Scientific & Industrial Research, India, in Science Magazine.

Ireland

• Offers a 20% R&D tax credit, plus a full deduction, as well as a low generally applicable 12.5% corporate income tax rate.

• Capital expenditure may also quality for a separate flat credit.

According to IDA Ireland, the government agency with responsibility for the promotion of direct investment by foreign companies into Ireland, “Many leading global companies have found Ireland to be an excellent location for knowledge-based activities….” Nearly half of all IDA supported companies now have some expenditure on R&D and 7,300 people are engaged in the activity.

Japan

• Offers a flat 10% R&D tax credit (a 15% flat credit is provided for small companies), in addition to other incentives.

In 2003, US subsidiaries spent $1.7 billion on R&D in Japan. Junichiro Mimaki, an official from Japan’s Ministry of Economy, Trade, and Industry, said in an August 26 interview with the Bureau of National Affairs that R&D and IT tax relief has created 400,000 jobs and boosted gross domestic product by 6.1 trillion yen ($55 billion) over 3 years.

Korea

• Tax holidays, up to 7 years, are provided for high-technology business.

• In addition, a variety of tax credits are provided for R&D-type expenditures.

Korea is moving aggressively to attract foreign R&D investment, promoting not only tax incentives but also other benefits for foreign companies locating R&D in the Incheon Free Economic Zone (“IFEZ”).

Singapore

• “R&D and Intellectual Property Management Hub Scheme” offers US companies a 5-year tax holiday for foreign income earned with respect to Singapore-based R&D.

According to Singapore’s Economic Development Board Web site: “Singapore does not just welcome business ideas; it actually seeks and nurtures them. We play host to any shape and size of enterprise and innovation—startups with little more than the germ of an idea, global corporations with large R&D teams and complex production operations.”

United Kingdom

• Allows a 125% deduction for R&D expenses, plus a 175% deduction for R&D expenditures exceeding a base amount of prior-year R&D spending.

The UK leads the world in attracting R&D investment by US affiliates—US subsidiaries spent more than $4 billion on UK-based R&D in 2003. The 125% deduction alone is the equivalent of a flat 7.5% R&D tax credit.