Abstract: Based on the data of A-share listed companies in China’s strategic emerging industry in the period of 2008-2016, this paper studies the effects of fiscal subsidies and tax preferences on corporate innovation investment, and analyzes the performance difference of this effect in different external environments. The results show that fiscal subsidies and preferential tax policies can effectively stimulate enterprises to increase their R&D investment. Considering the time effect, it is found that the incentive effect of the fiscal and taxation policies have a certain time lag, and the best effect will be usually achieved after a period of policy implementation. At the same time, the incentive effect of the fiscal and taxation policies also has a certain continuity; the fiscal subsidies are conducive to the short-term technological innovations, but not enough to stimulate the long-term innovations, while the tax preference policies have incentive functions on both the short-term and long-term technological innovations. The results of the further research also show that the optimization of market environment and the improvement of intellectual property protection system can strengthen the incentive effect of the fiscal and taxation policies, while the distortion of factor market will weaken the incentive effect of the fiscal and taxation policies. Therefore, it is necessary to improve the tax preference-oriented innovation incentive policies, to take the fiscal subsidies as the supplementary policy to stipulate enterprises’ independent innovations, at the same time, to improve the local external environment and give full play to the innovation incentive function of the fiscal and taxation policies.

Key words: fiscal and tax incentive policies; fiscal subsidies; tax preferences; corporate R&D investment; external environment