Do the changes in tax incentives encourage direct investment in China by Taiwanese enterprises?

Abstract

This study examined the association between tax incentives of China's 2008 Enterprise Income Tax Law (the 2008 tax law) and inflows of foreign direct investments from Taiwanese enterprises (TDI) toChina. In addition, this study also investigated the effects of industry and location on TDI. This study showed that reduced tax rate concessions for foreign enterprises and increased tax rate considerably reduced TDI inflow to China. Furthermore, industry-specific tax incentives became more favorable than location-specific tax incentives after the new tax laws were introduced. The results of joint tests of tax reform and tax incentives indicated that the 2008 tax law did not provide location-specific tax incentives for TDI, while industry-specific tax incentives appeared to be more attractive to TDI. Moreover, Taiwanese enterprises with intensive indirect investment in China as well as with higher shareholdings were inclined to have higher TDI. The implications of these findings implied that foreign direct investment strategy in accordance with industry-specific and location-specific tax incentives can enhance the competitive advantages of multinational companies.

Tax Incentives and the Flow of Foreign Direct Investment to Non-Oil Sector: Empirical

“…There are scholars who gave their backing to the incentive policy and at the same time, some remained skeptical on how the incentives can bring good result. Kransdorff (2010); Christiansen et al (2003) and Asiedu (2002) saw rationality in developing countries trying to induce inflow of foreign capital into their economy.…”

“…Christiansen et al (2003) share Asiedu"s view and contend that in a depressed poor economy, foreign direct investment not only provide finance for long term investment, but can equally produce a spillover effects to other firms in the form of transfer of technology and human capital formation. Kransdorff (2010) also accepts that foreign direct investment goes with new technology and management practices which can benefit the economy of developing countries.…”

Impacts sur l’investissement du Pilier Un et du Pilier Deux

“…De plus, la littérature désagrège les contraintes globales de conformité fiscale. D'après les études, les principales composantes des coûts de conformité sont les coûts de dépôt des déclarations de revenus et les coûts de tenue des registres (Lignier and Evans, 2012 [52]; Colmar Brunton, 2005[53]). Pour de nombreuses entreprises, une part majeure de leurs coûts de conformité financière est attribuable à l'établissement de leurs états financiers (Asatryan and Peichl, 2018 [54]; Eichfelder and Vaillancourt, 2014 [47]).…”

Résumé

“…De plus, la littérature désagrège les contraintes globales de conformité fiscale. D'après les études, les principales composantes des coûts de conformité sont les coûts de dépôt des déclarations de revenus et les coûts de tenue des registres (Lignier and Evans, 2012 [52]; Colmar Brunton, 2005[53]). Pour de nombreuses entreprises, une part majeure de leurs coûts de conformité financière est attribuable à l'établissement de leurs états financiers (Asatryan and Peichl, 2018 [54]; Eichfelder and Vaillancourt, 2014 [47]).…”