VAT credit refund policy and outward foreign direct investment
Firm‐level evidence from China
Bibliographic Data
| ID | 22420504 |
|---|---|
| Authors | Qilin Mao (0000-0002-4984-2191, Center for Transnationals' Studies, Economic Behavior and Policy Simulation Laboratory, Academy for Advanced Interdisciplinary Studies Nankai University Tianjin China, corresponding author), Yueqing Wang (0000-0002-3676-5123, School of Economics Nankai University Tianjin China) |
| Year | 2026 |
| Volume | 44 |
| Issue | 3 |
| Pages | 717-735 |
| Publication date | 2026-07-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Contemporary Economic Policy (JOURNAL) |
| Journal identifiers | ISSN: 1074-3529 • E-ISSN: 1465-7287 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/coep.70027 |
| OpenAlex | W7138848264 |
| Language | EN |
| References cited | 32 |
We employ China's 2018 value‐added tax credit refund reform as a quasi‐natural experiment to investigate the policy's impact on firms' outward foreign direct investment (FDI). We find that the policy significantly promotes firms' outward FDI through improved liquidity, increased risk‐taking capacity, and heightened innovation incentives. The effect is stronger for non‐state‐owned enterprises, high‐tax‐burden firms, credit‐accumulating firms, and those with limited tax‐shifting capacity. The policy also expands outward FDI diversification across countries and industries. Additionally, we evaluate the policy's effects from a supply chain perspective, revealing that affected supplier firms can substantially enhance their customer firms' outward FDI through supply chain transmission mechanisms.
China · Foreign direct investment · Supply chain · Tax credit · Corporate Taxation and Avoidance · International Business and FDI · Working Capital and Financial Performance
| Highly cited | No |
|---|