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Bilateral Tax Treaties and Chinese Overseas Investment along the Belt and Road

【Authors】
DENG Liping, MA Jun & WANG Zhixuan
【WorkUnit】
DENG Liping, MA Jun (Xiamen University, 361005)WANG Zhixuan (Xiamen National Accounting Institute, 361005)
【Abstract】

In the context of the Belt and Road Initiative, the implementation of bilateral tax treaties is an important measure for the taxation services. Based on China's current taxation system, this paper analyzes the impact and mechanism of tax treaties on Chinese enterprises' investment choices in countries along the Belt and Road. Using the data of listed companies in China's A-share market and NEEQ from 2005 to 2016, the study finds that: (1) Tax treaties have different effects on host countries with different tax burdens and institutional qualities. They could alleviate the negative impact of high tax burdens and poor institutional qualities in host countries, but have no obvious impact on host countries with low tax burdens and high institutional qualities. (2) The breadth of the host country's tax treaty network is positively correlated to the entry of Chinese enterprises, and the tax treaty network can make up for the host country's poor institutional quality. (3) The impact of tax treaties has no significant difference on enterprises of different ownerships investing in the Belt and Road region. Research suggests that in the process of improving the tax treaty network in China, more attention should be paid to the differences between the host countries and optimizing the supporting measures for the implementation of tax treaties.

JEL:F21, F23

【KeyWords】
Bilateral Tax Treaties, OFDI, Institutional Quality, Belt and Road