Incentive Effect And Improvement Of China’s Corporate Income Tax Incentive Policies For R&D

With the development of informatization and globalization, technical innovation is playing an increasingly important role:For the country, it is the basic power to optimize the allocation of resources, promote industrial upgrading and improve the comprehensive competitiveness; for enterprises, it is the primary way to reduce costs, maintain solid market position and improve their market competitiveness. Technical innovation depends on the research and development investment (R&D investment as follows), and only after increasing R&D investment can enterprises provide a steady stream of power for innovation. Faced with external gap and risk, the enterprises restrict the scale of business R&D investment, which requires the government offer to provide relevant technical innovation policies such as financial subsidies, tax incentives and other s support policies to make enterprises keep an eye on R&D activities and provide a good external environment for R&D. Income tax incentive policies is one of the major technical innovation support current policies, and it is of great significance to study the effect of China’s income tax incentive policy to optimize our R&D environment and enhance the level of competition force.In this paper, we study the China’s income tax incentive effect through theoretical and empirical analysis. This paper will be divided into the following parts: The first part introduces the research background, purpose, significance, research content, research framework, and systems theory on R&D inputs and outputs and so on; the second part uses neoclassical investment model study the R & D tax incentives for business R&D activities influence; the third part uses a linear regression and propensity score matching method (PSM model); Finally, the article summarizes the conclusions and puts forward policy recommendations.Through the above research, this paper draws the following conclusions:15% preferential tax rate policy has a strong effect on R&D activities whether it is a linear regression model or PSM model. China’s income tax incentive policy on research and development plays an active role in enterprises’R&D activities. However, we still can see that there are still a number of issues need to be further improved on China’s current R&D tax incentive policies.