Abstract: Innovation is an important driving force for the development of enterprises, but the innovation model can affect their decision-making. Taking the A-share listed companies in China from 2003 to 2021 as samples, this paper empirically tests the impact of corporate innovation novelty on corporate tax avoidance and its affecting mechanism. The findings show that the enterprises with a higher degree of innovation novelty will have a higher degree of tax avoidance. The mechanism analysis reveals that the higher degree of innovation novelty could enhance the financial constraints of the enterprises and reduce their information transparency, thereby increasing the degree of corporate tax avoidance. Further analyses indicate that the positive correlation between innovation novelty and corporate tax avoidance is more pronounced in the enterprises with higher level of earnings management and decentralization. The economic consequence analysis shows that the tax avoidance behavior brought about by innovative novelty has a certain strategic effect, which can significantly enhance the market competitiveness of enterprise products. Therefore, during the process of innovation, enterprises need to coordinate various decisions well, so that various decisions can have a synergistic driving effect on innovation. Comprehensive and differentiated regulatory strategies should be established to cope with tax avoidance behaviors with different attributes.

Key words: innovation novelty, corporate tax avoidance, financial constraint, information transparency