Assessment Of The Differential Effect Of R&D Expense Deduction Policy On Enterprises’ R&D Investment

Corporate R&D is an important part of an innovative country strategy,and R&D investment is a key point in it.How to make government subsidy policies further stimulate enterprises to increase their R&D investment is an important topic of great R&D value both in terms of theoretical exploration and empirical research.As an important part of China’s R&D subsidy strategy,the importance of the R&D expense deduction policy cannot be overstated.This paper takes the differential impact of this policy on enterprises’ R&D investment as the main research object,constructs a partial equilibrium model,explores the links between policy subsidies,external environment and enterprises’ R&D investment,and analyses the impact effects of different policy scenarios.Based on the data of Chinese listed companies from 2020 to 2021,this paper further evaluates and analyses empirically the differential impact of the policy on enterprises’ R&D investment.The theoretical study in this paper suggests that the incentive or crowding-out effect of the add-on deduction policy on enterprises’ R&D investment depends on the enterprises’ R&D investment,with the incentive effect occurring when R&D investment is low and,conversely,the crowding-out effect.The empirical study provides empirical evidence for this view,while a double difference model is used to assess the differential impact of the two policy options,concluding that a better development of market intermediary organisations and a rule of law environment with a higher percentage of add-on deductions will have a better incentive effect on firms’ R&D investment.Synthesising the theoretical and empirical research content,this paper puts forward the policy recommendation such as using the policy of add-on deduction together with other fiscal and subsidy policies,and establishing a national-level big data platform to realise precise and structured R&D subsidies.