BioWorld International Correspondent

PARIS - France Biotech has condemned the government's reform of the research tax credit regime as a "scandal" and described the statements made in the National Assembly by the Ministers of Research and of Industry and Small and Medium-Sized Businesses as "a serious manipulation of parliamentary debate."

The French biotechnology industry association maintains that the reform will give multinationals a €10 billion (US$14.76 billion) windfall over five years but will not have any significant impact on the level of research and development spending.

The previous research tax credit system was based on 10 percent of R&D expenditure, plus 40 percent of the year-on-year increase in R&D outlays (up to a ceiling of €16 million), and France Biotech said this gave an incentive to small firms to increase their R&D budgets.

The new system, on the other hand, is based on 30 percent of total R&D (with no requirement for a year-on-year increase) up to a very high ceiling of €100 million in eligible expenditure per company (and 5 percent over €100 million). In addition, the reimbursable grants awarded by the state innovation agency and competitiveness clusters are excluded from the eligible amount.

In the view of France Biotech, that change, which it said was introduced "without prior consultation with the departments concerned in the Ministry of Research and the Ministry of Industry," will have the effect of penalizing recent start-ups (since 30 percent of their R&D spending will be less than 10 percent of their outlays plus 40 percent of the year-on-year increase). The industry association adds that it is particularly unfavorable for all firms receiving public grants, many of which will no longer be eligible for any research tax credit.

At the same time, France Biotech said it deplores the fact that large companies with high levels of R&D expenditure will benefit from a "huge tax windfall," which it describes as a "disguised reduction in corporate tax."

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