Chamber’s Opinion Taken into Account in Developing the Product Development Aid Regulation
In June, the Chamber submitted several proposals to the draft of the Product Development Aid Regulation and highlighted the fact that the draft promoted inequality and distorted honest business environment. Almost all of the proposals made by the Chamber were entered into the Regulation that entered into force on 3 August.
Aid does not have to be repaid
According to the initial draft, the aid had to be repaid if the final report of the project revealed that the result of the project was a functioning solution. The aid did not have to be repaid if no new functioning product was created within the framework of the project.
The Chamber highlighted that with the help of the aid, a company could have developed a technologically functioning solution, but for certain reasons, e.g. due to the current market situation or manipulation by the entrepreneur, the new product could have proven to be initially unpopular. According to the draft, the latter meant that the solution was not functioning and the aid received for the project was not subject to repayment. After the end of the project, the product developed with the help of the aid could have become successful and the turnover of the entrepreneur would have significantly increased with the help of the new product. At the same time, if the entrepreneur would have developed a technologically functioning solution with the help of the aid, and it would have immediately been reflected in the sales turnover, the entrepreneur would have had to repay the aid.
The Chamber also found that requesting the repayment of the aid only in case of successful development was not reasonable and would have given a result that would have been contrary to the expected. For example, if a company has been able to create a new product with great export potential, the company creates additional value, which can be transferred to creating new jobs, higher salaries and bring additional tax revenue for the country. At the same time, in case of failure, no additional value is created and it would not be reasonable to support only acquiring experience with such support measure.
The Regulation also abolished the requirement that in case of a successful project, the aid should be repaid. The aid has to be repaid only if the requirements arising from the regulation have not been fulfilled.
Period for carrying out the project extended
In the draft, the maximum period of the project was 30 months that created a risk that during that time, a company would be able to manipulate its activities and start using the aid in a dishonest manner.
In the Regulation in force, the period for carrying out the project is 36 months.
Parallel development of products not included
The Chamber highlighted separately that parallel development of new products could also be supported. This would increase the probability that technologically functioning solution or solutions would be created. This would ensure higher probability of increasing competitiveness of Estonian entrepreneurs.
Applying for and conditions of the aid
Applications for the product development aid can be submitted to Enterprise Estonia who consults entrepreneurs and carries out supervision over the use of money. The maximum amount of aid per one project is €200,000 and the minimum amount is € 20, 000. The company’s own share must be at least 30% of the costs and the duration of the project may be 36 months. The support is primarily aimed at small and medium-size companies in the processing industry. To apply for the support, the average sales revenue of the company during the past two years must be at least €200,000.
The Regulation is available here.