The Research Of Lawful Regulation On The Harmful Tax Competition

In the late twentieth century, the process of economic globalization has become an unchangeable tide. Along with the deepening of economic globalization, The international mobility of capital is increasingly enhanced, which provide advantage to the emerging of international tax competition. At the same time, the interaction of economic policies between countries gradually deepening. When one country reduces the tax rate or implements the preferential polices to attract more capital, it will erode the tax base of the other countries. So, the international tax competition comes into being, if the other country adopts the same tax policy. Since latter half of the 20th century, in order to make much foreign capital flow in, many nations take various tax competition measures. The international tax competition has grown in intensity, and the domestic tax competition is being one of the important content of various countries' political economic life day by day.Before the Reform and opening up, our country has a deeply centralized fiscal management system, the subnational governments of our country didn't have their own independent fiscal interest and corresponding tax jurisdiction, so there has been no subnational tax competition whatsoever. After that, along with the establishment of the tax-divided system, subnational governments form independent fiscal interest, to achieve the biggest interests, domestic tax competition is being more and more intense.As a tool of finance policy of the government, tax competition has both positive and negative economic effects. The key factor which decide the development direction of tax competition is a good arrangement of law system. Owing to lacking the system guarantee and system restriction, subnational tax competition of our country being to bad day by day. So, it's necessary to adopt the lawful measure to regulate the harmful tax competition between the subnational governments.This paper attempts to use the general theory of subnational tax competition to study the harmful tax competition of our country, through analysis of the special reasons of the domestic harmful tax competition, put forth some concrete lawful plans to regulate it, after reviewing the legal system overseas about regulating the harmful tax competition.