On 19 October 2026, the OECD released a new analytical report titled “The Role of Corporate Tax Systems in Supporting Business Dynamism,” examining how tax design influences firm entry, exit, growth, and innovation across 38 member countries. The report uses firm-level data to assess the impact of statutory tax rates, loss carryforward provisions, R&D tax incentives, and capital allowances on business dynamism indicators. It finds that tax systems with generous loss offset provisions and refundable R&D credits correlate with higher startup rates and productivity growth, while high statutory rates combined with narrow bases reduce firm entry.
Key Takeaways
- Loss Carryforwards: Unlimited and unrestricted loss carryforwards are associated with a 15% higher firm entry rate compared to jurisdictions with time or amount restrictions.
- R&D Incentives: Refundable R&D tax credits increase innovation expenditure by young firms by 20% on average, whereas non-refundable credits primarily benefit large, profitable incumbents.
- Policy Recommendations: The OECD recommends broadening corporate tax bases while lowering statutory rates, enhancing loss relief symmetry, and designing R&D incentives that are accessible to loss-making startups.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement