Compareation On The Influence Of Tax System To Foreign Investment Between The Mainland And Taiwan

The tax system is a country or the area sets down in legal form the tax system according to its own society, economy, and politics in certain historical period. It is mainly to solve the "which tax should be levied, whom should be levied, how to ensure the realization of the state's tax ", and so on issues. The investment is the act or process that economic entities transfer elements or economic resources into capital in order to obtain uncertain benefits.The tax system will affect investment. In theory, these affect include three aspects: the investor's investment-decision-making, investment capacity and investment structure. The investor's investment-decision-making depends on the taxpayer's investment yield, and the investment capacity is subject to four elements: Corporate profits remains, corporate depreciation, the self-financing and corporate lending business. And the investment structure is a complex that the governments adjust the market structure, layout of the industrial structure and guide the orientation of investment, as the main macro-management. These tax impact on investment, including foreign direct investment as a reflection.The influence of the tax system to the investment has two kinds of ways: One is that the tax system affects the investment spontaneously; the other is consciously. In fact, this is the function of tax neutrality and tax regulation. What the tax neutrality stressed is that reducing the distorting effects of taxation from the microscopic mechanism through the establishment of the small taxes. In the macro level, the state must actively use tax means to coordinate economic development and the promotion of economic growth and improve macroeconomic efficiency, which is tax regulation requires. Therefore, tax neutrality and tax regulation are the same on the objective although contradictory.There are many differences between both sides of the strait on tax system, in which the most important taxes are three types: corporate income tax, personal income tax and value-added tax. In the enterprise income tax, because "the taxpayer", "the tax rate", "the loss atonement", "the foreign investment yield "the tax amount which offsets and remits the tax amount", "the tax preference way", "capital recognizing" and "the expense deducts" and so on certain essential factors are different, they have different influence on the investment. In addition, because of the both banks personal income tax, the increment duty and so on actual content's difference, the influence is also no comparison between them to the investment.Both sides joined the WTO. The WTO, which contains the MFN principle, the principle of national treatment, tariff concessions principle, the principle of anti-dumping and countervailing principle, requires the tax system a lot to a country (region). Looking at the mainland of China and the Taiwan region by these principles, it is obviously that the two sides have many insufficiencies. Mainland of China's four major issues: discriminatory tax policies do not comply with anti-dumping, countervailing principle of tax policy, high tariff and non-tariff restrictions coexist; tax policy transparency is low. Taiwan's main problem is three-fold: "Promote Industrial Upgrading" is inadequate "Export Processing Zone Establishment and Management Ordinance" is deficiency; excise duty-paid price is different between inside and outside.Therefore, mainland China should adhere to the principle of tax neutrality and tax regulation, and reform the existing tax system. For enterprise income tax, it should be: a truly unifying the foreign income tax due to cut tax rates, broaden the tax base, adjusting the preferential policies, changing preferences; reform collection mode, improve the efficiency of tax collection and management. For personal income tax, it should be: cut tax rates, reduced grades, and expand the tax base; avoid double taxation, and coordinate corporate income tax and personal income tax. For the value-added tax, it should be: a "consumption" tax, improve the tax system, eliminating the capital gains tax in the current domestic and international tax policy difference improve the export tax rebate system.