Will Tax Incentives Inspire Enterprises To Increase Investment In R&D?

Profitability is a crucial goal for enterprises.Even though they all know the importance of scientific and technological innovation,whether or not and how much they invest in those activities are constrained by profit-making targets.R&D decision-making by enterprises based on profitability standards is not always the optimal decision because of the high cost,high risk and low return of science and technology innovation activities.Therefore,the government has introduced preferential taxation policies to encourage enterprises to carry out scientific and technological innovation and encourage them to increase R&D investment.Although all the major countries in the world generally adopt various forms of preferential tax policies to encourage enterprises to innovate,academic researchers have different conclusions and opinions on such tax preferential policies to encourage enterprises to research and develop.This paper aims to study the relationship between preferential tax policies and R&D investment caused by the impact of corporate profit targets,to explore the best policy range and to put forward some proposals on this situation.This paper divided into three part:theoretical analysis,empirical analysis,conclusions and policy recommendations.The first chapter is the introduction,which mainly introduces the background of this topic,the thesis structure,research methods and possible innovations and deficiencies.The second chapter is the literature review.In this part,this paper summarizes the relationship between tax incentives and R&D investment of domestic and foreign scholars,summarizes the factors that scholars generally believe will affect the incentive effects of tax incentives,and draws lessons from our domestic scholars.The third part is theoretical analysis,focusing on the role of tax incentives in science and technology innovation,the objectives of the policy and the influence factors,as well as the threshold effect mechanism of tax incentives on the innovation of science and technology.The fourth part is empirical analysis.This paper takes 183 high-tech enterprises from 2012 to 2016 as samples.First,this paper establishes a linear regression model with R&D intensity as the dependent variable and income tax incentives as independent variables to explore the overall effect of income tax incentives.Due to the limitation of corporate profitability,there may be a nonlinear relationship between R&D intensity and income tax incentives,this paper uses the threshold panel regression model to study this relationship and perform robustness tests.The fifth chapter is the foreign policy reference to promote the incentive effect.The preferential tax policies of the major innovative countries,such as the Alternative Minimum Tax in Taiwan,the R&D tax credit limitation,the preferential policies for small and medium-sized enterprises,as well as the loss-making enterprises,have effectively dealt with the possible threshold effects of tax preferential policies.The sixth part is the policy recommendations,according to the theoretical analysis and empirical analysis of the conclusions,this paper put forward specific recommendations.According to the theoretical and empirical analysis,the conclusions are as follows:China's income tax incentives for high-tech companies have generally boosted R&D intensity.For Chinese high-tech enterprises,there is a double threshold effect between income tax preference and R&D investment.Only when the ROE of the enterprise is between 7.4%and 8.5%,the preferential income tax rate has a strong incentive effect on R&D investment:when the state finances discards the preferential rate of 1 unit,the enterprise will increase the R&D intensity of 9.498 units.When ROE is greater than 8.5%or less than 7.4%,the effect is negative.According to the statistical analysis of the sample data of 2016,only 23.76%of the total preferential tax incentives for listed high-tech enterprises exerts a positive stimulus.In view of this threshold effect,this paper puts forward different policy suggestions to different profit-making enterprises:for loss-making enterprises,loss can allowed to be traced forward,extend the period of back feeding.For the small and medium-sized enterprises,it is necessary to expand the range of preferential tax deductions for venture capitalists to all technology-based SMEs,adjust the deduction ratio of education funds,and allow SMEs to choose and pay personal income tax independently or Enterprise income tax,to increase the flexibility of the system.For high-profit enterprises,we can consider the establishment of tax incentives,and the need to play a government regulatory role to ensure fair competition in the market.