Increase intensity of private R&I
Poland has been gradually increasing the business expenditures on R&D as a result of the catching-up process with its Western European counterparts (0.18% of GDP in 2010 to 0.39% in 2014, more than double in nominal terms). Yet, it continues lagging behind most EU countries, also when compared with its neighbours (1.03% of GDP in CZ and 0.98% in HU in 2013). Even though the actual business R&D expenditure might be underestimated due to the lack of appropriate incentives for businesses to report them and/or qualify them as R&D costs, the innovation output indicators show little progress towards a more innovation-driven economy. Poland scores particularly low on the criteria related to SMEs innovating in-house and SMEs introducing innovations (last or second to last among 34 countries included in the ranking), with a declining trend in 2007-2012 for product or process innovation.
The European Council reiterated in its country-specific recommendations in 2014 the importance of introducing new tax incentives for R&D as a way to leverage R&I spending by business sector. The existing tax incentives are either used by a limited number of large companies that either register a R&D centre (42 companies in 2015) or acquire technology (80 beneficiaries in 2014). Even the official government documents confirm that “the existing system, intended to support innovativeness of enterprises, favours the purchases of ready-to-use solutions, thus supporting transfers of foreign solutions”, as spelled out in the background document, prepared in 2012 by the Ministry of Economy for the Strategy for the Innovation and Efficiency of the Economy for the years 2012-2020.
The Enterprise Development Programme for the years 2014-2020 (EDP) adopted in 2014 and implementing the high-level Strategy ‘Dynamic Poland’ contains a comprehensive list of planned measures to support the development of innovation and entrepreneurship including tax incentives for R&D. The national smart specialisation strategy is an integral part of the document.
The science and higher education reforms from 2010-2011 established the operations of two executive funding agencies for basic research and applied research. The National Centre for Research and Development leverages business R&D spending by introducing multiple grant programmes as public-private partnerships (e.g. BRIdge, CuBR). The principle is also used for sectoral programmes financed from the Structural Funds 2014-2020 (e.g. INNOMED or INNOLOT). In 2014, the average private co-funding from business enterprises in all programmes funded by NCBiR amounted to 23%. The NCBiR requests its beneficiaries to adequately report their own financial contributions in order to better account for the BERD.
The Polish Agency for Enterprise Development offers innovation vouchers stimulating collaboration between SMEs and research institutions (in 2002-2012 a total of 30.6m PLN/ €7.3m was distributed among 2,053 entities). The allocations per voucher were subsequently enlarged and are offered also in the current programming period. In parallel, similar instruments are also offered by some of the regions. Overall, the programming of the EU Structural Funds for 2014-2020 in Poland was guided by an explicitly stated shift in focus from financing technology absorption to technology development with several measures focused on launching new services and products (e.g. NCBIR managed Research for the market, Demonstrator+ or Applied projects).
The Act on Amendments of Some Acts with respect to the Support for Innovativeness adopted in September 2015 introduces the definition of R&D efforts to the Polish tax accounting system and allows companies to classify parts of the R&D expenditures as tax deductible costs as from 2016 which is aimed at increasing R&D business expenditures. The initial version of the Act included substantial tax exemptions for R&D performers, but they were removed in the subsequent parliamentary work.
The effects of the science and higher education reforms from 2010-2011, increasing focus on leveraging business R&D in the current programming period (in line with the national smart specialisation strategy) and recent changes in the tax accounting system are likely to generate further increases of BERD in the coming years. Increasing shares of researchers employed by business enterprises (from 16% in 2010 to 29% in 2013) are already signs of increasing research capacity of business. The implementation of R&D tax breaks foreseen in the EDP has the potential to further increase R&D expenditures, but the implementation was put aside in 2015.