Study Of Tax Incentive Policy On Venture Capital In China

The development of high technology with its industrialization is the foundation of national economic system transformation from high labor density to high technology density, which is also the necessary path for the update of national economic structure and its sustainable development of economy in China. Accelerating this transformation, the development of venture capital plays a vital role on the technology innovation and application. The venture capital has grown tremendously in recent years, although, in China, it is still in nascent stage, not paralleling with the economy as a whole, especially in terms of the number, the size and the scale of venture capital companies in China, and lagged far behind of the average level of developed countries. As we all know, taxation is taken by most governments as an effective tool to adjust the development of economy, and venture capital as well. Using the appropriate tax policies, the government could better and more efficiently deploy the capital and encourage the development of certain industry sector, therefore boosting the development of the economy as a whole. There are six chapters in this study. It is based on the analysis of current situation of the venture capital (VC) in China, and aiming to improve tax incentive policy on VC, which enables tax policy better serve the development of venture capital in China, and ultimately leads to a healthy ecosystem for co-development of venture capital, tax policy and economy.The study begins with the introduction of the background of current economy of China, the significance of the study, previous literatures reviewed, the structure as well as the innovations and limitations of this study (chapter 1). Then, after a brief introduction of basic conceptual definition of venture capital, the inherent connection between venture capital and technology innovation, and the tax impact on the development of venture capital are all evaluated (chapter 2). Through the analyses of the case of telecom and computer software industry, the tax impact on VC and economic growth is further discussed with a dynamic evaluation of VC in China (chapter 3).Based on a brief review of Chinese VC, the current venture capital related tax policies are thoroughly and systematically analyzed. The limitations of current tax policy on VC are pointed out, and the benefits of improving them as well. This is the first innovative point of this study. The main limitations of current venture capital...