Macro tax incentives and corporate sustainable innovation: Evidence from Chinese Enterprises

Innovation has become the driving force behind China's economy's sustainable growth. Due to the efficient transmission of taxation leverage, preferential tax policies are frequently used to stimulate innovation. Therefore, the incentive effect of preferential tax policies on sustainable innovation has gradually become the focus of attention. This paper takes the 2016- 2019 China A-share listed high-tech enterprises as a sample, calculates tax incentive intensity with the aid of B-index, and studies the incentive effect of preferential tax policies on the sustainability of corporate innovation. This study shows that: (1) Tax incentive intensity has a positive incentive effect on corporate sustainable innovation. (2) The R & D expenses plus deduction policy and the preferential tax rate policy can significantly enhance corporate sustainable innovation, but there is a substitution effect between them. (3) Based on the heterogeneity of institutional environment and enterprise characteristics, the incentive effect of tax preferential policies is more obvious in enterprises which are non-state-owned and in areas with low government intervention and sound legal system. However, the incentive effect of different types of preferential policies differs in the size of the enterprise. This study will provide reference for the improvement of preferential tax policy system and the optimization of innovation policy environment.