Analysis Of The Influence Of The Foreign-invested Enterprises' Income Tax Expenditure On FDI

Since China's reforming and opening, by carrying out the tax expenditure policies that give foreign investors preferential benefits, the amount of the foreign capital flowing into China has already been the largest continuously compared with other developing countries. And in 2003 the amount of China's foreign capital placed first in the world, even surpassing that of the United States. But the foreign capital introduced focuses mainly on some labor-intensive form manufacturing industries and some processing industries, while there is little in some fields that our country needs badly to develop such as agriculture, basic facilities, high-tech industries and emerging industries. And most of the foreign capital items spread in the special economic zones and eastern coast areas while there is little foreign capital in mid-west areas where economy is relatively backward. The enterprises'income tax was permitted in the 5th session of the 10th National People's Congress on March the 16th in 2007. The new law has improved the present enterprises'income tax expenditure policies, but no concrete rules on tax expenditure have been advanced up to now.The thesis tries to analyze the influence of the present foreign-invested enterprises'income tax expenditure on FDI, points out its weaknesses and proposes that it should be improved. That's to say, the goal of foreign-invested enterprises'income tax expenditure should be repositioned; its forms should be changed; the budget should be made and the analysis of its cost and benefit should be made too. We hope that the study can provide a reference for the completion of the concrete methods of new enterprises'income tax expenditure and lay a basis for evaluating the effects of foreign capital introduced by taking into account the cost of foreign direct investment.The innovation of the thesis lies in the analysis of tax policies'influence on FDI from the expenditure perspective, taking into account the cost the government has to pay for to attract foreign direct investment. Finally, it is clear to us that owing to the limitation of time, energy and especially knowledge of the author it needs further improvement. The study is only a general analysis of the influence of the present foreign-invested enterprises'income tax expenditure on FDI, not a comprehensive empirical one, thus no sound form of tax expenditure can be advanced from the empirical perspective.