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Effect of Fiscal and Tax Policy on R&D Investment: Empirical Evidence from Tax Collection and Management System

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DOI: 10.23977/etemss.2018.1672


Yanyan Li

Corresponding Author

Yanyan Li


With corporate data on tax preferences of additional deductions for R&D spending obtained from tax collection and management system for a city in China from 2008 to 2014, fixed effect model was used to check effect of fiscal and tax policy on R&D investment of enterprises and difference in effect on enterprises of different sizes. The results indicate: (1) The policy of adding deducted tax preferences plays a limited role in promoting R&D investment of Large enterprises. However, it is difficult for SMEs to be entitled to benefits from tax preferences due to bad operating conditions. As a result, effect on promoting R&D investment of SMEs is not significant. (2) Compared with Large enterprises, SMEs obtained a higher proportion of financial subsidies. And financial subsidies play a more significant role in stimulating investment of SMEs. (3) Under the double-incentive policies, R&D investment of enterprises is less sensitive to financial subsidies. Tax preferences and financial subsidies are mutually complementary in terms of their effect on promoting R&D investment of enterprises. The results of the study have verified the need to increase the deductions for R&D of SMEs and prolong the period for R&D companies to cover loss.


Tax preferences, Financial subsidies, R&D investment, Incentive effect

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