Improve tax incentive system according to the characteristics of enterprises’ innovation activities
To promote independent innovation, we should design incentive mechanism from two aspects, namely, how to enhance the capability and how to strengthen the initiation. It is necessary to solve the problem of lack of motivation as well as the problem of lack of capability. As to enhancing the capability of independent innovation of enterprises, it is necessary to establish a system of enterprise technology development reserve; we can provide preferential policies for loans of technological innovation projects provided by financial institutions, especially for the loans of technological innovation projects of SMEs; we can implement preferential policies for risk investment, encourage investment in technological innovation of SMEs, and form an exit mechanism of scientific risk investment in the form of tax policy; as to the income that is re-invested in science and technology innovation projects, we can give exemption or tax return; in the reform of personal income tax and cancellation of tax basis, the income of high-tech personnel linked to innovation projects can be given certain concessions; we can allow enterprises to implement equity incentive measures to high-tech research and development personnel; and so on. Through a series of tax policies, from both internal and external aspects, we can form a mechanism to promote the gathering of funds and talents to the scientific and technological innovation enterprises. As to strengthening the independent innovation initiation of enterprises, we can allow the extraction of a certain proportion of the risk reserve for some scientific and technological innovation projects identified by relevant state departments; we can allow enterprises to use the previous year annual profit to make up losses; we can implement pre-tax expense deduction on eligible scientific and technological development projects, such as the scientific and technological research and development projects that have efficiency spillovers and strong social benefits, and the transformative income of the development results can also be given a certain tax deduction; we can allow qualified enterprises to take accelerated depreciation; we can increase concessions to enterprises on various forms of research and development, results transformation, and transfer. In this way, we can establish an interest compensation mechanism for enterprises in science and technology investment from the perspective of tax policy, so as to eliminate potential risks of the scientific and technological innovation activities in all aspects, weaken the uncertainty, and enhance its revenue determinism and security.
Form a policy system and incentive mechanism by close coordination of tax policies, fiscal policies, and financial policies
Although taxation is an important policy means to stimulate enterprises’ independent innovation, tax policy also has its limitations. It should be coordinated with financial policies. Especially when in China the current financial situation is still very difficult, too much tax incentives will intensify the burden of government finance. Therefore, in the use of tax incentives, we need to take into account the possibility of government financial resources by not causing excessive tax revenue. We should strengthen the guiding effect and incentive effect of taxes. We need to understand that tax incentives do not necessarily mean less tax or giving benefits to the enterprises. Tax policy also includes increases in the rate of appropriate tax to backward technology and high energy-consuming industries. Tax administration needs a good coordination of tax and development of enterprises and economic development, and it should be based on the prerequisite of enhancing the follow-up tax capacity, and the long-term income and development. The government’s subsidy policies, government procurement policies, as well as financial loan policies and structure, venture capital investment, capital market tilt policies, insurance operation, and so on, will play a promoting and guiding role on independent innovation capability and motivation of the enterprise. Therefore, we need to coordinate different focuses of different tax, fiscal, and financial incentives, so as to promote and guide enterprises to independent innovation from different aspects and perspectives.
Fully strengthen legal framework of taxation to improve independent innovation
It is proposed to learn experience from the developed countries on formulating the Law on Promoting the Taxation of Independent Innovation, standardize the existing complicated and fragmented tax preferential policies, and clarify the tax policy support of independent innovation in the form of law. Through higher level, more authoritative, more stringent tax laws, we can provide an effective legal framework for the rational use of tax incentives.