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Chile rolls out R&D tax credit to boost research

Posted on behalf of Michele Catanzaro.

Companies doing applied research in Chile are set to get a substantial tax credit, a move that the government hopes will encourage innovation and boost employment in science and technology.

Since 2008, businesses have been able to win tax rebates for investing in research collaborations with academic partners. From Friday, 7 September, they will be able to claim for in-house research as well, potentially reducing their tax bill by up to 35% of the amount the companies invest in research projects that are certified by the Chilean Economic Development Agency (CORFO).

The law also eliminates or relaxes limits on the total amount of tax relief available to companies, and it extends the types of spending that qualify to include intellectual-property costs and infrastructures cost. CORFO hopes to certify 100 contracts, tied to a research investment of US$20 million, by the end of 2013. “The economy must include more science in order to develop,” says Conrad von Igel, executive director of InnovaChile, an innovation programme run by CORFO.

The government hopes to increase the commercial contribution to science funding, which amounted to 38.7% of the national total in 2010, according to the Ibero-American and Inter-American Network of Science and Technology Indexes (RICYT).

The latest figures from RICYT show that in 2008, Chile spent about 0.39% of its gross domestic product on research and development (R&D), amounting to less than US$1 billion (see ‘Science at stake in Mexican election’ for a comparison of research investments across Latin America).

“The new law is welcome, because Chile’s investment in science is very low,” says Pablo Astudillo, a PhD student in molecular biology at the Catholic University of Chile in Santiago, and a spokesperson for More Science for Chile, a campaign group. “However, the law does not give a clear incentive to hire scientists,” he adds. “Chile is doing a lot to educate scientists, but is not offering enough jobs.”

“We must wait to see whether companies get excited by doing R&D,” says Jorge Babul, a biochemist at the University of Chile in Santiago and president of the Chilean Council of Scientific Societies. “In any case, we still need a really comprehensive R&D law that increases the number of scientists, and offers chances to Chilean scientists who have gone abroad,” he says.

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    Conrad von Igel said:

    On behalf of CORFO, I would like to express our hope that companies take advantage of this progressive tax incentive for R&D. An example of this is 3M. The company decided to invest US$35 million in a 3M Innovation Center in Chile due to the favorable new R&D tax incentive. I would also like to clarify that the tax credit of 35% on R&D spending applies for all expenses incurred, including in Human Resources for R&D, which means that in terms of hiring researchers for this purpose, at least 35% of a researcher’s salary is subsidized via taxes, providing a clear incentive for hiring scientists. – Conrad von Igel, Executive Director of CORFO’s InnovaChile

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