Impact Of Tax Preference On Innovation Of High-tech Enterprise

Science and technology are primary productive forces. Development of science and technology is crucial to a country in terms of both economy and strategy. Especially currently when China is undergoing economic transition and upgrade, it complies with the trend of the times to develop the high and new technology industry with high added value. Companies are the corpus of national technology innovation. Their innovation capabilities are of vital importance to enhance the country's comprehensive strength. However, innovation activity of a company is related to its funding. Optimization of resources by market is not achieved due to market failure. Therefore, government should shoulder the responsibility to exert its influence, providing good macro policy environment for companies to innovate. As a good means to regulate macro economy, tax policy can be used to support growth of economy. In light of this, China government has made use of the taxation preference policy to guide and promote high-tech companies to engage in technological innovation, just as what many countries are doing. Many policies have been issued to encourage companies to make technological innovation and transfer the achievements. Against the backdrop, it is of great help for government to improve existing policies through comprehensive and complete research. Good policies that can positively promote companies' innovation activities are in urgent need, as they can encourage companies to increase R&D funds and human resources, enhance transfer of research achievement, increase sustainable core competitiveness.The author red lots of literature and data, both theoretical and practical, to analyze the existing policies. The necessity and importance of tax preference policies to the innovation capability of a high-tech company is then elaborated theoretically. Taking software companies as research objects, and from the point of R&D expenditure and human resource input, the author adopted empirical approach to analyze whether tax preference can promote companies' technology innovation, and whether different tax preferences exert the same influence. It is found that favorable income tax and added-value tax can both exert positive influence. Circulation tax (mainly added-value tax) can attract companies to assign more staff on R&D. compared to income tax, circulation tax plays a much bigger role. In the end, the author put forward suggestions on improvement of tax preference policies for high-tech companies to enhance technological innovation capabilities.