A Study On The Impact Of Tax Credit Rating System On Corporate Innovation

The initial impetus for stimulating high-quality economic and social growth is innovation.While establishing a novel paradigm for development and advancing industrial restructuring and advancement,it is necessary to use innovation drive as a means to cultivate new growth points and stimulate the vitality and R&D efficiency of enterprises as innovation subjects.Enterprise innovation often requires long-term and continuous capital investment,but as innovation R&D activities themselves are characterised by large investment,long cycle time and high risk,coupled with the existence of problems such as information asymmetry and lack of corresponding collateral assets,enterprises are often eventually faced with relatively serious financing constraints,which inhibit their innovation activities.Therefore,how to effectively alleviate the company’s financing difficulties,direct the flow of funds to their innovative activities and promote their ability to innovate is currently the focus of attention of the government and the community.The tax credit rating system is a new tax collection and management model in the modern tax system,which focuses on highlighting the incentive effect of tax collection and can form a useful complement to the traditional tax collection and administration methods.The tax credit rating system is a system whereby the taxation authorities,in strict compliance with relevant laws and policies and on the principle of fairness and equity,rate the credit status of enterprises in tax-related matters on a yearly basis under a set of unified evaluation system.Enterprises with A-grade credit rating can not only enjoy convenience in many fields such as taxation and financing,but also improve their social reputation,Effectively alleviate the problem of enterprise and external information asymmetry,reduce external debt financing costs and agency costs,thus providing stable financial support for innovative R&D activities and promoting enterprise innovation.This paper begins with a review of the literature on tax administration,tax credit rating system and enterprise innovation;secondly,it defines the concepts related to tax credit rating and enterprise innovation,compares the background and current situation of the implementation of tax credit rating system in China,and on this basis,combines information asymmetry theory,reputation theory,expected utility theory and financing priority theory,etc.,to analyze the theoretical mechanism of tax credit rating system affecting The theoretical mechanism of corporate innovation is analyzed;in the empirical analysis part,the policy effect of tax credit rating system on corporate innovation and its path of action are tested by using a multi-period DID model,taking A-share non-financial listed companies from 2010-2019 as the research sample and tax credit rating disclosure as a quasinatural experiment.The findings show that: i.the tax credit rating system significantly drives firm innovation,and the results remain robust after the PSM approach and the DIDM model are adopted to control for possible endogeneity and heterogeneity;ii.bank credit and internal corporate governance are the two paths through which the tax credit rating system affects firm innovation;iii.in situations of higher information asymmetry,poorer reputation,smaller size and possession of more technological resources,the effect of tax credit rating systems on corporate innovation is more pronounced.Based on the above findings,this paper proposes specific policy recommendations for government departments such as tax authorities,tax-paying enterprises and other relevant institutions.The research in this paper extends the research in the field of incentive tax collection,enriches the literature on the tax credit rating system itself and the mechanisms and economic consequences of its functioning,and expands on the factors that influence business innovation from the new perspective of tax credit.In addition,enterprises with an A tax credit rating are able to obtain more bank credit support and lower agency costs,thus directing more capital to innovation activities and promoting enterprise innovation.This provides an important policy basis for the government to use tax credit to promote enterprises’ independent and honest tax payment,design tax reduction policies,promote "bank-tax interaction" and "mutual recognition of credit",and innovate tax supervision.