The draft version of the National Research, Development and Innovation Strategy published on 6 November focuses on enterprises and production of higher added value. One of the new elements of tax regulations adopted on Monday, tax relief on contributions for researchers, is fully consistent with this concept.

The tax relief on contributions for researchers taking effect as of 1 January 2012 basically provides tax relief which the employer can utilize for employing researchers with at least a PhD title at a research center, up to gross wage of 500 thousand forints. The tax relief equals the entire amount of social contribution tax which means that enterprises can reckon with a tax rate of 0 percent instead of 27 percent, and they are also exempt of paying the 1.5 percent vocational training contribution. The effect of this measure on the budget balance is estimated at 2bn HUF, considering that almost 1300 PhD researchers active at enterprises constitute its target group.

Example: the total monthly wage expenses for a medical researcher earning a gross wage of 400 000HUF payable by the employer will be 400 000HUF in 2013, instead of 514 000HUF in 2012. This will result in annual savings of 1 368 000HUF for the employer.

In addition, the tax act includes another favourable amendment: as of 1 January enterprises which conclude a cooperation agreement on research and development with a research institution operating as a central budgetary institution or as an economic entity majority owned directly or indirectly by the state can also utilize corporate tax base deduction of up to 50 million forints. The estimated effect of this measure on the budget is about 1.5bn HUF.

The Government expects that the measure will significantly increase the number of PhD researchers and research teams headed by them which work at research centers of enterprises. As an indirect effect of the measure, it will make more financial sense for research centers of enterprises to employ highly educated researchers of special professional knowledge, as liabilities payable for them will significantly decline. Yet another impact of introducing the tax relief on contributions will be that career prospects of researchers with academic grades will improve. The measure provides outstanding advantages for innovative SMEs, as in the future they can conduct  in-house R&D.

(Ministry for National Economy)