Recently, Professor Cai Hongbo of BNUBS and Ouyang Yanyan and Li Zijian of Sun Yat-sen University jointly published the paper Tax Avoidance Motivation, Mechanism and Scale of Enterprises' Foreign Direct Investment: Theory and Evidence in the third issue of the World Economy in 2022, which was rated as "TOP10 Best Chinese Papers in International Investment in 2022" in the World Economic Yearbook 2023.

Since the global subprime crisis in 2008, China's foreign direct investment (OFDI) has grown rapidly, making China a net capital exporter and the second investor in the world. It is worth noting that while OFDI brings benefits, there are also a lot of cross-border tax avoidance problems.Based on the theoretical framework of enterprise tax avoidance, Cai Hongbo and his collaborators tested the cross-border tax avoidance effect of enterprises' OFDI by using the data of Chinese listed companies' OFDI from 2005 to 2018.The research shows that the investment behavior in tax havens enables enterprises to avoid 13.8% of corporate income tax, 11.7% of business tax and 16.5% of value-added tax. Every 1 unit increase in FDI can reduce the domestic tax burden by 0.166, 0.119 and 0.138 units respectively. The bigger the company, the stronger the tax administration and the higher the financing constraints, the more cross-border tax avoidance.The mechanism study found that transnational corporations transfer profits to low-tax areas through “high import and low export” and pay intangible asset fees in high-tax areas, thus reducing the corporate income tax payable, and at the same time achieve “domestic sales to export” by reducing domestic business income and obtaining export tax rebates and other preferential policies, thus reducing the tax burden of indirect taxes. This paper provides a reference for the sustainable development of foreign direct investment.

Founded in 1979, the World Economic Yearbook is sponsored by the Institute of World Economics and Politics of the Chinese Academy of Social Sciences and published by the China Social Sciences Press.The selection of the annual "TOP10 Best Chinese Papers" in World Economics and its sub-disciplines began in the 2015 volume of the book.Candidates are ranked based on citation data, number of downloads, expert votes, and the impact factor of the journal in which the paper is published.The citation data, downloads and journal impact factors were obtained from CNKI or Scholar Google.The experts participating in the vote are all first-line scholars from universities and research institutions across the country, totaling more than 2,300 people, including 400 members of the China Society of World Economics.

The following is the list of "TOP10 Best Chinese Papers in International Investment Science 2022"：

TOP10 Best Chinese papers in International Investment in 2022

Provided by Tang Chengjian

Reviewed by Cai Hongbo