The Impact of 'Business Tax Changing to Value Added Tax' on Enterprise Innovation in China ----from the Perspective of Enterprises’ Tax-transfer Ability

The policy dividend of “Business tax changing to Value added tax” (“BT to VAT”) that the enterprise can enjoy is closely related to its own tax-transfer ability due to the easily tax-transfer characteristic of valued added tax. Based on the samples of Shanghai and Shenzhen A-share from 2009 to 2016, we studies the impact of “Business tax changing to Value added tax” policy on enterprise R&D innovation, and takes the bargaining power of suppliers and buyers as indicators to measure the tax-transfer ability of enterprises, and examines the impact of the tax-transfer ability of enterprises on the effect of “BT to VAT” policy. The research result shows that this reform has prompted the enterprise to increase the investment in research and development and improve the level of innovation. When the tax-transfer ability is stronger, the promotion effect of “BT to VAT” on enterprise innovation is more significant. Further research finds that enterprises with different property rights and different industries have different responses to the effect of “BT to VAT” policy. The incentive effect of “BT to VAT” policy on enterprise innovation and the effect of tax-transfer ability on the effect of “BT to VAT” policy are only significant in non-state-owned enterprises and other modern service enterprises. The conclusions of this paper provide theoretical and empirical basis for in-depth analysis of the effect of “BT to VAT” policy and the government's subsequent improvement on the tax reform policy to further stimulate enterprise innovation and industrial transformation