This project examined the effects of profit taxation on business performance and innovation through well-defined transmission channels and the resulting policy implications. The project made three key contributions: first, it contributes to the theory of the tax-innovation and tax-productivity nexus with a particular attention to financing constraints of innovating firms. Secondly, it exploited unique datasets that combine profit tax and firm-level information and that are an ideal match for the issues to be examined empirically. Thirdly, the project applied estimation strategies that allow identifying the link between taxation and innovation/productivity in a compelling way. The specific questions examined complement previous research on taxation and innovation under the SEEK programme.