TITLE:
The Research on the Impact of VAT Additional Deduction Policy on Innovation Output in the Production and Service Industries
AUTHORS:
Qiumei Gu, Haisheng Hu
KEYWORDS:
VAT Additional Deduction, Corporate Innovation Output, Difference-in-Differences, China
JOURNAL NAME:
Open Journal of Business and Management,
Vol.12 No.5,
September
12,
2024
ABSTRACT: In 2019, to deepen the VAT reform and promote substantial VAT reduction, the Ministry of Finance, the State Taxation Administration, and the General Administration of Customs jointly issued the VAT additional deduction policy. This study uses data from A-share listed companies in the productive and life services sectors from 2017 to 2022, with the 2019 additional deduction policy shock as the core explanatory variable. Using the difference-in-differences method, we conduct baseline regression and analyze firm heterogeneity to investigate the impact of the additional deduction policy on innovation output in these sectors. The study finds that the 2019 additional deduction policy significantly increased the innovation output of firms in the productive and life services sectors, and the policy effects exhibit significant heterogeneity. In these sectors, non-state-owned enterprises benefited more from the policy, showing a more pronounced increase in innovation output compared to state-owned enterprises; high-tech industries experienced better innovation output improvement than non-high-tech industries; and growth-stage firms had a more significant promotion effect on innovation output compared to mature firms. The study suggests further deepening the VAT additional deduction policy reform, expanding the scope of applicable industries, enhancing policy precision, strengthening policy promotion and supervision, and fully leveraging the policy’s incentive effect on innovation output. It also recommends refining the policy to provide varying levels of support to different types of enterprises.