Megan Woods appears to expect pre-profit start-up companies to hope and pray they won’t be overlooked by the Government’s proposed R&D tax incentive plan, National’s Science and Innovation spokesperson Parmjeet Parmar says.
Dr Woods told Parliament that of the 300 businesses currently receiving a growth grant through Callaghan Innovation, some 200 aren’t yet profitable. These 200 businesses will not be able to receive a tax credit under the Minister’s proposal.
“This could be the tip of the iceberg because not all start-ups seek grants during their growth phase and the Minister has no numbers for the total proportion of NZ businesses undertaking R&D during their growth phase.
“They won’t take any comfort from Dr Woods’ assurance that she’s ‘committed to finding solutions’ or that officials are still working on that bit of the plan. Assurances don’t help New Zealand innovators when they’re trying to project their cash flows.
“It also isn’t clear that start-ups who have reached profit will be as well off under the Minister’s plan since the growth grants are currently set at 20 per cent and the tax incentive put out for consultation was at a 12.5 per cent rate, a gap noted in MBIE’s advice to Dr Woods last November.
“What a tragedy it would be for New Zealand if the next big thing ended up walking away or quitting because of this lack of certainty. They deserve better.”