The real estate industry was brought into the scope of value-added tax (VAT) in 2016, so that enterprises that purchase and build real estate can benefit from considerable tax deduction. Will it aggravate the tendency of enterprises to invest in housing? This problem has not been tested in current studies. Taking the VAT deduction policy as a natural experiment and using the paired sample difference regression method, this paper tests the impact of VAT deduction on enterprises’ investment behavior with the data of listed companies in 2014-2017. The results of empirical research show that the real estate deduction significantly increases state-owned enterprises’ real estate investment and squeezes out the equipment-type fixed assets investment of such enterprises, reflecting the trend of " shifting from real economy to virtual economy”. Our research also finds that the one-off deductible investment grows more obvious than the real estate fixed assets investment which is deducted by two times. The real estate investment bias brought about by the deduction policy has significantly inhibited the R&D investment of non-state-owned enterprises. Through mechanism identification, it is found that the capital squeezing effect is the main channel for the R&D inhabitation effect. This study has a certain reference value for us to understand what exactly housing investment behavior is and how to correct it.
Does VAT Deduction Drive Enterprises from Real to Virtual? From the Perspective of Investment Structure
Journal of Finance and Economics Vol. 45, Issue 11, pp. 112 - 125 (2019) DOI:10.16538/j.cnki.jfe.2019.11.009
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Cite this article
Liu Jindong, Guan Xinghua. Does VAT Deduction Drive Enterprises from Real to Virtual? From the Perspective of Investment Structure[J]. Journal of Finance and Economics, 2019, 45(11): 112-125.