THE ROLE OF TAX LAW IN ATTRACTING FOREIGN DIRECT INVESTMENTS

This paper examines the role of tax law in attracting foreign direct investment (FDI) by analyzing key fiscal and economic factors influencing corporate location decisions. The most important fiscal element identified is the stability of the tax system, which allows companies to accurately assess financial burdens and avoid unexpected costs. The level of the effective tax rate, along with transparency, tax reliefs, exemptions, and nominal tax rates, significantly impacts investment choices. Corporate income tax is particularly crucial, as its level is carefully analyzed before companies decide on new market entry. Additionally, labor costs, wage levels, the stability and flexibility of labor law, and social security contributions are key considerations. Infrastructure, market proximity, availability of skilled labor, and judicial efficiency also influence investment success. Research, based on a survey responded to by CEOs of global companies, confirms that a well-structured tax system shapes a country's investment appeal by affecting budget revenues and economic growth. Governments seeking to attract foreign investors through tax reductions are likely to enhance their country’s desirability as a business location.