China's Tax Costs Attract Fdi Impact Study

In the various influencing factors attracting foreign direct investment (FDI, Foreign Direct Investment), the tax impacts increasingly, countries have to use revenue measures to attract FDI.China in this regard have made a lot of attempts, mainly reflected in the cost of foreign-funded enterprises preferential tax entities (that is, the tax preferential policies formulated), and has been quite successful.But with the passage of time, the sensitivity of the FDI versus the preferential tax policy gradually began to weaken, and related tax costs (primarily for the collection and management audit costs, socio-economic cost, tax compliance costs) increasingly high, as well as on the negative FDI the role of being recognized.Different from previous studies, this paper focuses primarily on the tax preferential policies on the impact of FDI, and introducs the concept of tax revenue into impacts of attracting FDI. Firstly, started from FDI flows theory (that is, international production compromise theory),we proceed on the tax cost on the impact of FDI, that is, foreign tax costs by influencing the transaction costs and the district select foreign FDI to influence decision-making;then we study the status quo of tax cost, conclude the characteristics of China's tax revenue, and make a preliminary analysis about the role of tax cost during the development of FDI;then we collect data, carry out the relative analysis and the change of Q flexibility analysis, and further clarify the results of the previous analysis,the result implies that on the one hand, the sensitivity between FDI and the entities tax cost has been gradually weakening, in the future, "two tax merger" will not have too great effect to FDI inflows, in order to ensure that our new income tax effect of the implementation of the policy and the inflow of FDI, guarantee a fair tax system should be on the basis of the tax preferential policies to further improve;on the other hand, the FDI-related tax costs (primarily for auditing and collection costs, tax compliance costs, socio-economic cost), the sensitivity gradually increase, and a negative correlation between the two, that is to say if these costs have not been properly controlled, FDI in the future will have an adverse impact on the inflow, we should now on the basis of the results achieved, in view of an area to create a good environment to further control tax compliance costs, audit costs and the collection and management of the socio-economic cost.