The Effect of Tax on Attracting Foreign Direct Investment in D-8 Countries

No country today without the active participation in international trade and the global economy can not reach its proper development. The challenge currently facing developing countries including Iran is how the international activities of the company are effective. Economic development will be achieved due to the increasing volume and variety of exports and attract foreign direct investment and thus increasing export competitiveness. Therefore، in this study، the impact of taxes on attracting foreign direct investment has been examined. Panel data approach for the years 1995-2012 is used in this study. Variables include GDP، the degree of trade openness، education، population، exchange rate and inflation rate. Based on the findings of the study، exchange rate، inflation rate and taxes have a negative impact on attracting foreign direct investment and variable of trade openness، population and GDP have a positive impact. It is observed that Indonesia with higher growth in attracted investment has lower tax rates than other D-8 countries in different years.