Tax Neutrality, Financing Constraints, and Enterprise Total Factor ProductivityA Study Based on the VAT Carry-over Refund Reform

As a key measure to deepen the reform of value-added tax (VAT), the VAT carry-over refund policy is of great significance for alleviating enterprises' capital pressure and stimulating the vitality of market entities. This paper takes the 2018 VAT carry-over refund policy reform as a quasi-natural experiment, uses data from A-share listed companies in Shanghai and Shenzhen, and adopts the difference-in-differences (DID) method to examine the impact of the VAT carry-over refund policy on enterprises' total factor productivity (TFP) and its mechanism. The study finds that the VAT carry-over refund policy significantly improves enterprises' TFP, and the policy effect is more significant in state-owned enterprises and enterprises in eastern regions. Meanwhile, mechanism tests show that the VAT carry-over refund policy promotes the improvement of TFP by alleviating enterprises' financing constraints. This paper systematically evaluates the policy effect of the VAT carry-over refund reform, which helps to theoretically reveal the important significance of tax neutrality for enterprise operations and provides a reference for further promoting the construction of a modern VAT system.