Taxation and Enterprise Innovation: Evidence from China’s Value-Added Tax Reform

This article used China as an example to study how tax reform affects the innovative behavior of companies. Our research showed that value-added (VAT) can affect corporate innovation behavior. On basis patent-application data Chinese enterprises, we difference-in-differences framework differences in performance industrial enterprises patent applications before and after China’s 2009 VAT reform. We demonstrated had a positive impact on innovation; this conclusion is robust. In subsequent research, promoted by expanding investment fixed assets reducing debt ratios; however, due government’s subsidies corporations financing constraints, pecking-order effect was increased. addition, greater export non-state-owned enterprises. provided insights for emerging countries into formulating innovation-driven sustainable development reduction policies.