This paper studies whether tax reform can promote industrial innovation and competitiveness on the provision of the tax incentives between the Statute for Industrial Innovation and the Statute for Upgrading Industries. The evidences indicate that after the implementation of Statute for Industrial Innovation, although R & D tax incentives reduced, enterprises will continue to actively make research and create innovation in response to competitive. The effect for small business R & D expenditures is negatively larger than large business. Besides, the effect of Statute for Industrial Innovation on traditional industries’ R & D expenditures is significantly positive than hi-tech industries’, implying that the policy is helpful for traditional industries’ R & D and innovation development by way of grants or counseling from Government.