Abstract: It is an important measure to deepen the supply-side structural reform and implement the strategy of innovation-driven development by adopting the tax reduction policy to stimulate enterprises to improve their total factor productivity. This paper makes use of the data of the National Manufacturing Industry Tax Survey during the period from 2012 to 2016 and employs the fixed effect model and the SYS-GMM estimation method to analyze the impact of corporate tax reduction on corporate financing structure and TFP. The findings show that: firstly, corporate income tax reduction can increase enterprise’s internal financing and extrude floating debt financing, so as to improve total factor productivity; secondly, corporate income tax reduction has a maximum stipulating effect on the total factor productivity of foreign-funded enterprises, followed by the private enterprises, and has a minimum effect on the state-owned enterprises; thirdly, corporate income tax reduction has a maximum stipulating effect on the total factor productivity of the small and micro enterprises, followed by the medium-sized enterprises, and has a minimum effect on the large scale enterprises. Therefore, it is necessary to increase the range and inclusiveness of the corporate income tax reduction policies, strengthen the implementation of income tax reduction policies for small and micro enterprises of science and technology type and give more tax relief to them, and expand more financing channels for science and technology innovation.

Key words: enterprise income tax; tax reduction; financing structure; total factor productivity; internal financing