In FY 2006, the government abolished a special depreciation of equipment for “developmental research". In FY 2008, the government modified its tax incentive system to allow firms to claim an additional credit for 5% for the increase in R&D expenditures or an additional credit for 0.2% multiplied by the amount of R&D expenditures exceeding the equivalent of 10% of average sales, both within an additional 10% of corporate income tax. In 2010, a 20% preferential tax credit rate is expected for new-growth-engine R&D (30% for SMEs), and a 25% preferential tax credit rate is expected for original-sourcing-technology R&D (35% for SMEs). Recent and proposed changes in R&D tax incentives in OECD and selected non-member countries (cont.) In addition, an extra deduction will be created for existing companies (not start-ups) embarking on R&D for the first time.