A Study On Tax Policy To Promote China 's Foreign Direct Investment

Overseas Direct Investment is one of the important ways for a country to exert comparative advantage, to make full use of the international markets an d resources, to enhance its economic development momentum, and to enjoy the benefits of economic globalization. In order to enhance its ODI enterprises’ c ompetitiveness in the international markets, countries have introduced various p olicies to encourage enterprises to invest overseas. As an important means of macroeconomic regulation, tax policy plays an extremely important role in help ing the overseas investment enterprises to reduce operating cost, to deal with o verseas investment risk, etc. In recent years, in the backdrop of the strategy of‘going out’, along with our country’s ‘The Belt and Road Initiatives’, ‘Silk R oad’ overseas investment strategies being proposed and implemented, tax proble ms related to ODI is getting more and more attention. Cooperating with the pa ce of enterprises ‘going out’, the Chinese government made a lot of improvem ent on ODI related tax policies such as the income tax system, tax treaty, and the tax service for ‘go out’ enterprises. However, there are still many loophol es and deficiencies on the tax policies, which are restricting the pace of the d evelopment of ODI in a certain extent.In order to put forward some tax policy suggestions on how to promote China’s ODI, this article firstly analyze the theory on how tax policy can prom ote the development of ODI by introducing the ODI and the ODI development theory, and by emphatically introducing the theory of tax principle, analyzing the mechanism of tax’s influence on ODI and several kinds of tax policy tools.Next, on the basis of introducing the development of ODI in China, this pape r generalizes the ODI related tax policies in China, and analyze the shortcomin g of the tax policies. On the basis of the above theoretical analysis, the fourth part of this article carries on an empirical research on the influence of the tax policy to the ODI. This model uses China’s ODI flow amount as the explain ed variable, the tax preferential index and the cumulative number of executed t ax treaties as explanatory variables to explain tax policy according to tax theor y, GDP, exchange rates, interest rates as other explanatory variables according t o the relevant theories of ODI. Then make an analysis with SPASS. Results s how that the annual cumulative number of execution of tax treaties, tax prefere nce index are positively correlated to ODI, and the effect is remarkable. In ord er to further verify the result of regression analysis under the condition of com pletely eliminating multicollinearity, this paper examines the result of the regres sion analysis with the method of principal component factor analysis. The resul ts further proves that the tax policy has a significant positive effect on ODI, s o we can effectively promote the development of China’s ODI with tax policie s such as sighing tax treaties, the implementation of tax incentives and so on.Then, introduce various ODI policies of several major countries, and analyze th eir experience we can learn from. Finally according to our country’s strategy o f ‘going out’, draw lessons from international experience, from the tax incentiv e policy, the signing of tax treaty, tax management and service, international ta x cooperation four aspects to propose suggestions on perfecting China’s tax pol icy on ODI.