Study on the Impact of Bilateral Tax Treaties on OFDI: Empirical Research based on Contracting Countries and Regions

Jiayi Lu

doi:10.54691/m8pt2w72

Authors

Jiayi Lu

DOI:

https://doi.org/10.54691/m8pt2w72

Keywords:

Bilateral Tax Treaty; OFDI; Pardon Clause.

Abstract

In recent years, China has been accelerating the pace of opening up to the outside world, and the signing of bilateral tax treaties has become one of the important means to solve international tax disputes. This paper uses the stock data of FDI from 2003 to 2022 for empirical analysis, and finds that: (1) the signing of bilateral tax treaties has a significant promoting effect on enterprises' FDI. (2) A bilateral tax treaty with a tax concession provision is more likely to promote foreign direct investment by enterprises than a bilateral tax treaty without such provision. (3) Bilateral tax treaties have a stronger promotion effect on enterprises' direct investment in small and close countries with total trade volume. The research shows that China should actively promote the signing of bilateral tax agreements with other countries, and actively negotiate the content of tax exemption clauses, so as to provide a solid system guarantee for Chinese enterprises to go global.

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