Sporadic data disclosed show that in recent years the scale of China’s R&D tax incentives is considerable. As a special form of fiscal expenditure, in terms of the publicity, scarcity and effectiveness of public funds, an important question arises, that is whether lots of R&D tax incentives have an expected innovative output effect. In this regard, we propose two hypotheses to be tested. Firstly, R&D tax incentives can （cannot） significantly increase firms’ patents output, which is used to directly estimate the patent effect of R&D tax incentives. Secondly, R&D expenditures induced by R&D tax incentives cannot directly increase innovation output. However, under the protection of intellectual property rights （IPR）, R&D expenditures can indirectly increase innovation output. Intellectual property protection （IPP） mitigates the risk of policy failure of R&D tax incentives. The latter hypothesis is used to analyze the mechanism by which R&D tax incentives affect patents output. Next, taking the micro-data of China’s manufacturing listed companies from 2009 to 2013 as a sample, it uses appropriate econometric methods to conduct empirical tests. Direct estimates using propensity score matching （PSM） indicate that no matter the total amount of patents or different types of patents, R&D tax incentives do not have a significant effect. Using two-step method, it finds that R&D tax incentives can induce enterprises to increase R&D expenditures, but the induced R&D expenditures have no significant impact on the total number of patents. The R&D tax incentives in Chinese context are confronted with the similar dilemma of " Europe Paradox”. The reason lies in that the market-oriented industrial R&D policy cannot compel enterprises to engage in projects with high social returns, and the lack of novelty requirement for technological innovation achievements has hindered the enterprises’ innovation efforts. But the induced R&D expenditures can effectively increase patents under the adjustment of IPP, meaning that to some extent IPP alleviates the risk of policy failure that the R&D tax incentives lack the direct patent effect. In the case of invention, the induced R&D expenditures cannot also directly promote patents output, but also indirectly increase the patents output under the adjustment of IPP. For utility model and exterior design, R&D expenditures have no direct or indirect （under the adjustment of IPP） significant impacts. The foregoing conclusions passed the robustness test. In order to improve the innovation effect of R&D tax incentives and get out of the dilemma of " European Paradox”, China needs to optimize the policy design of R&D tax incentives, that is invention with the highest degree of novelty in technology, domestic or international new product development or the proportion of new product sales are taken as mandatory requirements for enjoying preferential tax policies; and it also should strengthen the IPP’s guidance and incentive effects on the formation of technical output by R&D expenditures. Compared with the existing research, this paper has certain marginal contributions in three aspects. Firstly, it uses more reasonable indicator to measure R&D tax incentives, namely the intensity of tax incentives, which is equal to 1 minus the ratio of the average effective tax rate to the statutory tax rate, is expressed as the ratio of tax preference to pre-tax accounting income. This method can objectively and macroscopically measure the R&D tax incentives enjoyed by Chinese enterprises. Secondly, it adopts more reasonable econometric methods. The patent effect of R&D tax incentives is directly estimated by PSM which can overcome the sample self-selectivity. The mechanism of R&D tax incentives’ patent effect is estimated by two-step method. First, PSM is used to estimate the additional R&D expenditure effect of R&D tax incentives, and then panel data model is used to estimate the patent output effect of additional R&D expenditures. Thirdly, apart from technical aspect, it also highlights the impact of institutional aspect on the topic. Empirical studies also show that IPP plays a regulatory role in the innovative output effect of the induced R&D expenditures.