Study On The Impact Of Tax Burden On The Competitiveness Of SMEs

With the continuous improvement of China’s development level,China’s SMEs have shown a steady growth trend,becoming an important growth point of the national economy,an important driving force for social development and an important force for creating and promoting employment,securing and improving people’s livelihoods and fostering innovative vitality.Although SMEs can play an active role in China’s economic growth,their growth and development has been uneven,as they have faced significant production and operational pressures,survival crises and even market exits.Particularly in recent years,as Chinese SMEs have been hit by the new crown model,increased market competition and growing foreign trade frictions,they have been severely affected by an increasingly challenging development environment.The small size of SMEs,their weak ability to foresee risks,irregular business management models and high financing costs have increased indefinitely,and their weak position in market competition has become more and more pronounced,so it is an important task to ensure the healthy and stable development of SMEs.The competitiveness of SMEs is constrained by several factors,one of the most important being the high tax burden,which is an obstacle to the development of SMEs.Therefore,this thesis uses factor analysis to select eight indicators as comprehensive indicators of the competitiveness of enterprises and explores the impact of tax burden on the competitiveness of SMEs based on theoretical studies.The theoretical study defines the concepts related to tax burden and corporate competitiveness and presents the mechanism of the role of corporate tax burden on corporate competitiveness from four perspectives-industrial structure,corporate finance,corporate investment and corporate innovation-based on theories such as resource theory and tax preference theory.It then analyses the current development status,competitiveness status and tax burden of Chinese SMEs,and organises the tax preference policy for SMEs in China.As part of the empirical study,in order to test the research objectives and hypotheses,the thesis uses GEM SME and sample firm data from 2016 to 2021 as the research population,on the basis of which a panel model is constructed to empirically test the impact of the SME tax burden on firms’ competitiveness.The results show that,first,the total tax burden and turnover tax burden of SMEs are negatively correlated with firm competitiveness,while income tax burden is positively correlated with firm competitiveness;second,the impact of SME tax burden on firm competitiveness is also significantly negatively correlated across regions,with the impact of SME tax burden on firm competitiveness being more significant in the Eastern region than more significant in the Central and Western regions;Third,there is also a significant negative correlation between the tax burden on SMEs and the competitiveness of firms with different ownership,with the tax burden of non-state-owned firms having a larger impact on the competitiveness of SMEs than the tax burden of state-owned firms.This implies that the tax burden of non-state-owned enterprises has a greater impact on the competitiveness of SMEs than the tax burden of state-owned enterprises.Finally,based on the results of the theoretical and empirical analysis of the relationship between the tax burden of SMEs and the competitiveness of firms,appropriate proposals are put forward to help SMEs to establish a rational tax burden structure and to promote the competitiveness of SMEs: The recommendations include: Reduce the tax burden on SMEs,promote tax reform,improve policy targeting,implement differentiated tax policies and provide more financial incentives to ease SME financing difficulties Recommendations include: Reduce the tax burden on SMEs,promote tax reform,improve policy targeting and implement differentiated tax policies,strengthen financial incentives to ease SME financing difficulties,collect and administer service taxes and reduce tax costs for businesses.