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Study on the Incentive Effect of R&D Expense Plus Deduction on Innovation of Science and Technology-based SMEs
Abstract
In the report of the 20th Party Congress in 2022, the core position of science and technology innovation is further emphasized, which also plays an important role in China's economic growth. Science and technology-based small and medium-sized enterprises (SMEs) in the survival and development of the road, facing financing difficulties and other heavy obstacles, need the government to actively play a function, with the help of fiscal and taxation policy means, for science and technology-based SMEs financing to provide strong support. As an important tax benefit, the additional deduction for R&D expenses aims to incentivize and support science and technology-based SMEs to strengthen technological innovation and enhance their independent R&D capability. On this basis, selected science and technology-based SMEs successfully listed on the China Growth Enterprise Market (GEM) during the period from 2018 to 2023 as a sample for empirical analysis, and utilized the fixed-effect model, a statistical method, to accurately explore the actual impact of the add-and-deduct policy on the innovation investment of science and technology-based SMEs. The study also takes the financing constraints suffered by enterprises as a mediating variable and analyzes whether it works through a signaling mechanism. The strength of R&D expense deduction and the intensity of innovation investment of SMEs in science and technology show a significant positive correlation. The study confirms that it works through a signaling mechanism to alleviate the financing constraints enterprises suffer. The effect of this policy is more prominent for those SMEs with high-tech enterprise status or in the "mature" stage of their life cycle. On this basis, the paper proposes a series of targeted strategic recommendations from the perspectives of both enterprises and the government.
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