The Incentive Effect Of Tax Preference For Venture Capital Industry

Recent years,with the gradual development of market economy in China,Venture Capital,as a newly-born way of investment,has gained rapid progress.Government Leading Fund of Venture Capital,no matter from the number or scale,has expanded significantly and has already been the main force for gathering innovation elements and for promoting innovative development.The flourish of Venture Capital is not only beneficial for new high-tech enterprise which is at their beginning stage to get financial support,but also plays an important role in boosting technology progress and gathering talents in the whole society.Therefore,our government gradually enacts a series of rules and policies aiming to promoting the development of Venture Capital and pays great attention to creating a healthy social and economic atmosphere for its development.As one of the most important economic methods of Macro-economic Control,tax has significant impact on Venture Capital enterprises,venture capitalist and new high-tech enterprises.Proper tax preference can play incentive effect and boost the double increase in the number and scale of venture capital,which has been proved in the economics theory and common practice all around the world.However,we should also recognize that there are still many disadvantages and drawbacks in the current tax preference policy,which could not meet the demand of our rapid development.From the perspective of empirical analysis,tax policy has great impact on the number of Venture Capital enterprises,registered place and organizational form,at the same time,the improvement of tax preference policy can greatly improve the total investment scale of Venture Capital.Through the comparison of relevant tax policy experience in typical developed countries,including Britain and America,there are still many disadvantages such as narrowed deduction scope,too short deduction period and insufficient encouragement for capitalists,which all limit the long term development of Venture Capital.Therefore,based on the former experience of typical developed country,we should improve our own tax preference policy taking our own facts into consideration.For example,we should expand the deduction scope step by step,and give extensive preference on the investment for new high-tech enterprises which are at the beginning stage.Also,we should try to reduce the gap of tax burden between different kinds of organizational form and promote the encouraging level for capitalists,providing a better tax policy guarantee for the development of Venture Capital in China.