Impact of New R&D Law on U.S. Software Development

Introduction to the New R&D Law

The recent changes to the R&D law introduce a requirement to amortize software development costs over five years domestically and 15 years if conducted internationally. This amendment is causing concern within the tech industry due to its broad language and potential implications.

Shifting Software Development Overseas

Although the law aims to boost domestic tech jobs, it might inadvertently drive U.S. software development to other countries. Nations like the United Kingdom offer more attractive R&D credits, which could entice companies to relocate their development efforts. The shift could result in U.S. entities focusing solely on marketing and sales activities.

Comparative R&D Credits

The global landscape of R&D credits is diverse, with many countries providing more favorable conditions than the United States. This disparity could lead to a significant migration of tech jobs, as companies seek to optimize their tax strategies by leveraging more advantageous international policies.

Conclusion

The new R&D law may have unintended consequences for the U.S. software industry. While intended to foster domestic tech job growth, the law's current structure could drive development efforts overseas, benefiting countries with simpler and more lucrative R&D incentives. The long-term impact on the U.S. tech landscape remains to be seen as companies adjust to these regulatory changes.