Proving R&D allowances will be easier
The chamber of deputies has discussed amendments to laws in connection with the development of the financial market. In the second reading, the coalition submitted a proposal to amend the Income Tax Act with the aim to simplify proving R&D allowances.
The proposed amendment responds to the decreasing number of taxpayers claiming R&D allowances. Lower interest in the allowance is likely due to the high formal and substantive requirements for R&D projects and the risk of not meeting these.
Taxpayers should now be able to prove that their project documentation contains all essential elements by other means of evidence. The essentials include, e.g., the project’s duration, the objectives of the project, the method of control and evaluation of the progress of the project, and the achieved results.
This extended possibility of proving does not reduce the requirements on the formal aspects of R&D projects and their completeness in terms of the required essentials. However, in case of doubt on the part of the tax administrator, taxpayers will be able to prove that they have met the essential requirements of individual projects by other means of evidence. The purpose of the new provision should be not to supplement the mandatory essentials of the project documentation but to subsequently elaborate on and prove these essentials in greater detail.
The proposed change should be applicable to tax proceedings initiated after the new regulation comes into effect, i.e., from 1 January 2024. The proposal will be discussed in the third reading in November.