Subject The article addresses economic relations arising in the process of interaction between the State and innovative enterprises on tax incentives for enhancing the innovation process and maximizing the positive effect of their utilization. Objectives The objective of the study is to analyze Russian and foreign experience in tax regulation of innovative activity and provide practical recommendations for improvement of the tax incentives system as a factor of stirring up the State support to innovative ventures. Methods The study is undertaken within the systems approach based on general scientific methods of comparison, analysis, synthesis of dynamic rows and structural description of elements in the investigated area, and graphic interpretation of data that provided the validity of estimations and conclusions. Results The findings revealed specifics of tax incentives in the system of indirect support to innovative activities. We reviewed foreign experience in applying tax incentives for stimulating the innovative activity of businesses; analyzed forms of tax incentives for Russian innovative active taxpayers; developed practical recommendations aimed at improving the mechanisms and forms of tax incentives. Conclusions and Relevance If implemented, the proposed measures will enable to improve investment opportunities of enterprises creating and introducing innovations, and, therefore, to increase the innovation level of the national economy. The analytical data obtained during the research, and our recommendations may find practical application when developing the State policy that addresses tax incentives as a key factor of boosting the innovative activities of companies.
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