Research On The Impact Of Income Tax Reform On Investment Direction

The new Enterprise Income Tax Law. which has changed the tax prefrence machanism,establishes an prefrence machanism of "industrial-based supplemented by regional concessions". Through the motivation of tax benefits, the adjusted tax prefrence machanism would have guided the capital into the industries that accord with the national industry policy and the areas that fit to the reginoal development policy.So that it promoted the transformation of economic growth form in China from extensive form to intensive form.Meanwhile,the twelfth five-year plan pointed out that we must strengthen the key industries and regional economic development. From the aspect of industrial investment, the plan pointed out that we must improve the level of manufacturing, optimize and upgrade the traditional industries,and give strong support to the development of strategic emerging industries. From the aspect of regional investment,the gorvernment would continue to implement the western development strategy, construct the old industrial areas and boost the development of central region. Based on the above analysis, we can draw conclusions that the income tax reform and twelfth five-year plan complement and promote each other and they make an impact on the corporate investment. Under this background, this paper studies the new Enterprise Income Tax Law on the impact of the direction of enterprise investment to test whether tax policy on industry investment and regional investment paly a guiding role.Technical route of this paper is as follows. Fist, the paper inspect the implementation of the new Enterprise Income Tax Law whether makes actual tax burden effecting the investment scale,and study the fall of enterprise tax burden whether to promote the enterprise investment. Second, on the basis of proving the enterprise investment scale is affected by the tax,the paper test whether taxes fall or taxes rise inspire or hinder the investment by dividing samples into different industries and regions.It shows that, if tax changes affect business investment, the new enterprise income tax law by making the tax change, in turn, guides enterprises to invest on different industries and regions. In the empirical analysis,the paper divides the samples into different industries and regions. In order to analyzes the impact on the corporate investment of income tax reform, sample datas are divided into two groups.Through the comparison of regression coefficients, the paper study the incentives on corporate investment of the new Corporation Tax Law.The results are as follows:in the industry analysis, manufacturing,information technology and social service have a significant reduction in the actual tax burden. The influence on corporate investment of tax burden increases,that is the decline in actrual tax burdern stimulates the enterprise investment. In regional analysis, the decline in tax burdern of eastern and central parts dosen’t achieve the effects of stimulating corporate investment. In contrast, the increasing of the tax burdern of the special economic zones stimulates the business investment. A marked increase in the tax burden of special economic zones dosen’t reduce the investment in these areas. It shows that the new Enterprise Income Tax Law works very well. The tax burden of western region doesn’t pass the differences examination, so it doesn’t change much before and after the income tax refrom.At he same time we can draw conclutions that the income tax refrom continue the old tax policy of western region and cooperate with the reginal strategy of west development.The relationship between tax and investment is proved in the indaustry analysis but the resaults are contrary to expectation in regional analysis.The main reasons are:First, the new system of tax concessions is industrial-based and supplemented by regional concessions and there are systematic differences in business investment among different industries. Second,the enterprise investment level is affected by many factors, the income tax is only one of them, and it is not the most important factor.The innovation point of this paper is that it empirically test the effects of income tax reform on the enterprise investment direction. Since the reaserch of tax incentives for industries and regional investment is still in blank field, this paper can complement the research in this direction.