Study On Tax Incentive System Of Venture Capital Enterprise In China

Venture Capital is a pattern of equity investment from venture capitalists to high-tech enterprises. The venture capitalists participate the entrepreneurial process of the enterprises which they invested by providing manage services, with a purpose to acquire a high value-added capital through equity transfer to quit the enterprises they invested after the enterprises has been in mature stage. The venture capital enterprise play a vital role in the high-tech development of a country, and the risk they faced is significantly higher than that of the other enterprises. By drawing up the legal system and institutions, such as tax incentive system, countries encourage the development of venture capital enterprises to promote scientific and technological progress.As China's tax incentive system of venture capital enterprises is relatively underdeveloped, it is necessary for us to study this system in depth to speed up the course of the legal improvement.First of all, this paper expounds the meaning and the form of expressions of the tax incentive system. These expressions mainly include tax relief system, tax credit system, tax postponement system, accelerated depreciation system, loss compensation system, drawback system and the elimination of double taxation system. And it also analysizes the influences that tax incentive system had on the venture capital enterprises in many aspects, such as equity, efficiency, investment direction, investment cost, investment income, corporate profits, and elaborates the urgent need of the venture capital enterprise for the tax incentive system.Secondly, this paper systematically introduces the current situation of China's tax incentive system about the venture capital enterprises. Anglicizing the main problems existing in the present system, this paper proposes the factors that should be took into account in improving the tax incentive system. The existing venture capital enterprises tax incentive systems in China are: Enterprise Income Tax Law, Partnership Enterprise Law, Provisional Management Measure of Venture Capital Enterprises, Circular on Tax Policy concerned in the development of venture capital enterprises, Circular on Tax Issues concerned in the course of corporate income taxation of the foreign-invested venture capital companies, etc. The main problems existing in venture capital enterprises tax incentive system included in the above systems are: the low legal level of tax incentive system, the over-level proportion of investment of R&D, failing in the combination between investment tax credits and term of investment, the small incentive objects in venture capital enterprises, some deficiency and controversy in incentive systems and so on.The third part discusses the improvement of the tax incentive system of venture capital enterprises in China, including tax relief system, extending the deadline of compensation for the loss of venture capital enterprises, allowing extraction of the pre-tax risk reserve fund, tax credit system, re-investment tax refund system, the abolition of business income tax for venture capital enterprises and so on.The fourth part is about the precaution of evading tax incentive system, including the precaution of evading taxation in use of loss compensation deadline, inspecting the precaution of evading taxation in investment profit and building up other systems, such as the establishment of anti- avoidance tax system, strict punishment system and the system of supervision to coordinate with these precaution measures.