Research On The Effect Of Preferential Tax Policy On Attracting Foreign Investment

The preferential tax policy on foreign investment has played an active role in attractingforeign investment and stimulating the economy development of China since its reform andopening up.However, with the change of China's economy development strategy and theaccelerating incorporate process of world economy, not only its effect on attracting foreigninvestment is decreasing, but also such broad range of preferential tax policy on foreigninvestment deteriorate the fair play between domestic enterprise and foreign companies to alarge extent.Especially, with the end of the five year protection period, a advantage as developingcountry when enter WTO, many protected field into which foreign investment is not used toallowed to enter will be opened up to foreign companies. If the original preferential tax policyon foreign investment is still carried on, it will definitely put the formerly protected industryat a more disadvantaged position. The current preferential tax policy on foreign investmentneed to be remedied and consummated urgently.Based on example analysis of the changing effect of preferential tax policy of attractingforeign investment since the reform and opening up, especially since 1994, this articledynamically reveals its changing situation.According to the current effect of preferential tax policy of foreign enterprise, otherdeveloped or developing country's experience and the principle, domestic circumstance andglobal environment that we should refer to when adjusting our country's preferential taxpolicy of foreign investment , this paper proposes advice and suggestions on itsadjustment .This article is arranged as follows: chapter one introduces the basic situation ofpreferential tax policy of foreign investment. Chapter two analyzes and unveils thedeveloping trend of the effect of our country's preferential tax policy of foreign investment byexamples. What the changing effect of preferential tax policy of foreign investment demandson our country's tax policy of it is analyzed in detail in chapter three. Chapter four introducesglobal experiences on adjusting preferential tax policy of foreign investment. And in the lastchapter, the author brings about the adjusting suggestion for it.