Review of Research and Development Tax Credit
Added on 2020-10-05
14 Pages5005 Words209 Views
|
|
|
The impact of taxationon business innovation
Table of ContentsINTRODUCTION...........................................................................................................................1THEORIES AND ASSUMPTIONS................................................................................................1LITERATURE REVIEW................................................................................................................4EVIDENCE/ EXAMPLES POTENTIAL QUOTATIONS............................................................6PERSONAL COMMENTS.............................................................................................................8CONCLUSION..............................................................................................................................10REFERENNCES............................................................................................................................11
INTRODUCTIONTaxation is the amount which is required to be paid by individuals as well as businessesconcerns on their wealth and income. All the rules and regulations that are related to tax areimposed by the legal and regulatory authorities. Whether a business is small or big it is essentialto pay appropriate taxes so that all the operational activities can be performed successfully.HMRC (Her Majesty's Revenues and Customs) is the non ministerial division in UK who isresponsible to perform all the taxation collection related activities. All the business entities areliable to pay appropriate taxes according to their business revenues (Bal, 2014). If anorganisation is misguiding the legal body than strict action can be taken against them. As most ofthe business entities are developing continuously and implementing innovations at their workplace hence government has also taken initiative to support them. In UK the government hasimposed a tax credit which is specifically designed to offset research and development expenses.In the research paper impact of taxation on business innovation has been discussed that includesdifferent assumptions, evidence and examples, literature review and personal comments on thisconcept.THEORIES AND ASSUMPTIONSEntrepreneurial innovation and taxation:In present world, taxation plays an important role, in growth and development ofeconomy. As a small entrepreneurial business firm it is the responsibility of management towidely believed to have and brought effective innovation practise and methods. This will bringefficiency among existing worker and develop more employment growth to economy. The mainobjective and purpose of entrepreneurial innovation is to bring invention in the policies andprocedure of existing business firm that will support in reduction of taxes paid by company andincrease the profitability during a financial year. In UK, entrepreneurship is encourage with thesupport of tax reduction for small companies and by different government support strategy. Inorder to bring efficiency and effectiveness in various business operation of company anentrepreneur is responsible as the play the role of provider of breakthrough invention to improvethe companies (Bednar-Friedl, Behrens and Getzner, 2012). The important document thedescribe the different part played by small entrepreneurial entity and large established businessentity in the innovation process in the UK. So in that case the small entrepreneurial business1
entity must create a large portion of discovery inventions and on the other side the largedeveloped entrepreneur business firm helps to deliver more detailed and specific ordinaryResearch & development. In general, an innovation, consistence economy holding desiredentrepreneurial activity. It is observed that in companies large share of funds and monetarybenefits for basic research in a company is might by financed through labour taxation and on theother side the in the other part are left for the profit taxation. When an entrepreneur focuses to improve the profit and performance of company theymust tries to make best and effective use of their resources. This will only can be possible in caseif entrepreneur knows each and every aspect of taxes policies and other rules and regulation toavoid or reduce the impact of taxes on profitability. It is observed that personal income tax,payroll tax and capital gain tax have a direct impact on the different activities performance byentrepreneur of small and large business firm. It also leave all individual entrepreneur orentrepreneur working in small and large companies with less expendable capital. Thus the theoryhold that the more higher the tax rate will make entrepreneur to think twice regarding theirinvestment in business project or other operation activities (Canming, 2013).Taxation on Research and DevelopmentIn today's world, contribution of research & development to grow the productivity ofeconomy, develop the performance of each and every unit of company that support to increasethe overall performance of economy. And it help in the achievement of social purpose andobjective. Innovation in small business are basically is an expensive activity and this is basicallydone because every organisation wants to grow and develop in term of profit and man-forcestrength. It is observed that manager of company in order to remain at the top in industry andmaintain competitive advantage are constantly developing and creating new techniques andtechnologies that will help them to reduce the impact of taxation and improve the profitability.But in the same context it has been determined that almost every small and medium sizedcompanies lack the sufficient workforce and resources that make them unpowered to invest infeasible research & development project. But recently, the newly developed techniques an dtechnology, fresh material and rational property developed by advanced business firm could bepriceless to the community (Enkel and Mezger, 2013). So in respect to make the research anddevelopment department the UK government has formulated a new tax credit policy that help toreduce the expenses of companies on R&D. Thus as a result of new tax credit policy many small2
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents