A Study On The Impact Of VAT Credit Refund Policy On Enterprise Innovation

In recent years,innovation has been occupying an important position in China’s national development strategy,and the report of the 20 th National Congress of the Communist Party of China states that insisting on the core position of innovation in the overall situation of China’s modernization construction.In the process of China’s economy from the stage of high-speed growth to the stage of high-quality development,science and technology innovation capacity is not strong is one of the important challenges we have to face.Compared with developed countries,China’s core technology is relatively lacking and backward,R & D innovation is not high degree of autonomy,we cannot keep relying on this unsustainable innovation model of buying advanced technologies from developed countries to enhance our technological stockpile,we must help enterprises really become the main body of innovation decision-making,R & D investment,research and development,transformation of results,to achieve innovation-driven development.As the main body of market economy,enterprises should play an important role in R&D and innovation.However,due to the obvious positive externality of innovation activities and various challenges faced by Chinese enterprises such as high labor cost and high tax burden,Chinese enterprises have the problems of insufficient innovation motivation and insufficient innovation capacity.As a policy to reduce taxes and fees,the VAT credit refund can open the VAT refund chain,improve the principle of VAT tax neutrality,help enterprises turn "dead retention credits" into "live funds",achieve relief for enterprises,create a favorable environment for enterprises to carry out R&D and innovation,and stimulate them to carry out innovation activities.This will create a favorable environment for enterprises to carry out R&D and innovation,stimulate their enthusiasm to carry out innovation activities,and alleviate their difficulties in improving their innovation level.Therefore,this paper studies the impact of VAT credit refund on enterprise innovation against the background of the Fiscal and Tax [2018]70,Notice on the Tax Policy Relating to the Refund of VAT Retained Tax Credits in Some Industries in 2018.This paper synthesizes the relevant literature and combines the existing research results to firstly explore the impact of VAT credit refund policy on enterprise innovation from the theoretical level and analyze the intrinsic mechanism of action.Then,a heterogeneity analysis is conducted from three perspectives: the industry characteristics of enterprises,the degree of financing constraints and the degree of marketization of the regions in which they are located,and then a hypothesis is proposed.In the empirical research section,the data of A-share listed companies from 2014-2021 are selected as samples for empirical testing,and the experimental and control groups are divided according to whether the enterprises belong to the industries specified in the policy,and a Difference-in-Difference model is constructed to study the impact of VAT credut refund on enterprise innovation.After descriptive statistics,benchmark regression,robustness test,mechanism test,and heterogeneity analysis in the empirical test section,the following conclusions are finally drawn: first,the VAT credit refund policy can promote enterprises’ innovation level,and the innovation level of the affected enterprises is significantly improved compared with that of the enterprises not affected by the policy.Second,the VAT credit refund policy will help enterprises improve their cash flow level,provide financial security for their innovation,reduce risks,and thus promote their innovation level.It will also improve the R&D capability of enterprises by helping them to increase their R&D investment and raise the proportion of R&D personnel,which will in turn enhance their innovation output level.In addition,the policy will also improve the internal environment of enterprises’ innovation activities by bringing into play the mechanism of corporate governance to reduce the agency costs of enterprises,thereby improving the level of innovation of enterprises.Third,the impact of the VAT credit refund policy on enterprise innovation varies depending on the industry characteristics,the degree of financing constraints and the degree of marketization of the regions in which the enterprises are located.The policy’s effect on promoting the improvement of enterprise innovation level is more obvious for high-tech enterprises,enterprises with high financing constraints and enterprises located in regions with a high degree of marketization.Based on the above analysis and taking into account the current situation,this paper makes three policy recommendations.First,reasonably relax the restrictions on the conditions for VAT credit refund policy.By appropriately lowering the threshold and at the same time increasing the refund ratio,enterprises can more fully enjoy the dividends of the policy and further exert the effect of the VAT credit refund on enhancing the innovation level of enterprises in order to promote the realization of highquality economic development.Secondly,it should focus on the effectiveness and targeting of the application of the VAT credit refund policy and play its role in the coordinated development of the region.In view of the characteristics at the enterprise level,the policy strength of VAT credit refund can be appropriately tilted to high-tech enterprises and enterprises with high degree of financing constraints to improve the efficiency of policy implementation;in view of the marketization degree of the regions where enterprises are located,green channels for tax retention refund can be provided to enterprises in low marketization degree regions to optimize the business environment so as to promote the coordinated development of regions with different marketization degrees.Thirdly,strengthen the supervision and crack down on the tax fraudulent behavior of VAT withholding tax refund.We should strengthen supervision beforehand,and crack down on VAT tax frauds during and afterwards,and increase the punishment to serve as a warning and deterrent,so as to protect the fairness of the tax retention policy and promote the establishment of a long-term mechanism for VAT credit refund.