Abstract: Based on the provincial panel data from the nationwide survey of tax concessions and relevant indicators of hi-tech industries in China from 2008 to 2010, the empirical analysis shows that tax concessions have significantly promoted R&D input of firms, while there is no short-term significant positive effect on R&D output, the development speed and the size of the hi-tech industry. From the perspective of the impact of tax concessions on R&D physical capital input, this study has resulted in the following findings. Among different types of taxes, concessions from corporate income tax as well as taxes on goods and services (especially VAT) can produce significant positive effects, but the latter produces greater effects. Among different regions, only on the firms in the eastern area do tax concessions show significant positive effects. Among different sources of capital, tax concessions indicate significant positive effects on both domestic-funded and overseas-funded firms, but exert a stronger incentive impact on the latter. From the perspective of the impact of tax concessions on R&D human capital input, tax concessions are also found to have quite significant positive effects on the whole, but among different types of taxes, different regions and capital sources, only on the overseas-funded firms do tax concessions show such effects. Therefore, this paper suggests that in future the emphasis of tax incentives for hi-tech industries in China be put on R&D input instead of hi-tech products production and sales, and the current tax incentive system through concessions of income tax and taxes on goods and services be continued and improved.
Keywords: Tax Concessions, R&D, Hi-tech Industries
source:Finance & Trade Economics ,No5,2014