China's Venture Capital Industry Tax Incentives Policy

As a special way of investment, venture capital takes a very essential role in the process of technology innovation; it is irreplaceable in the process of technology commercialization, as well. Somewhat characteristics and strong positive external effect coming with R&D and commercialization decide venture capital must be protected and supported by public and financial policies offered from the authorities. Such characteristics, mentioned above, is including like high risks high returns, long business cycle, and recyclable. Meanwhile, venture capital can only survive in the favorable and healthy legal system environment.As worldwide venture capital is in full flourish, many governments formulate and implement tax preferences, in order to prop up domestic development in venture capital. To some extent, tax preferences have lowered the risks of investments, increased the expectations of returns, and more important is that it has coordinated and promoted each link on venture capital chain. Based on these factors, tax policies have become the essential in guiding and supporting on development of VC.This paper researches on the tax policies through the entire industry of venture capital. Based on elaborating on venture capital, it researches on how the industry of venture capital can be affected by related tax policies, and then does the on-site investigation of tax policy of our country, whose conclusion is that it has some problems to be perfected still. At the end of this paper, it meets those problems, mentioned above, by giving suggestions.This research indicates that every link on the industrial chain of venture capital can be affected by tax policy, the existed tax policies are still unperfected, which are should be completed on theirs aim and principle, venture capital related legal system and tax policy.