Abstract: Favorable policy given to foreign investment has been an important policy in China.Taxation has a relatively strong meditation function in the system of economic policy and economic lever.However,our present taxation policy is quite different with the rules of WTO.A reflection on the relationship between the favorable policy and foreign investment will provide theoretical reference for making decision.It is important to make suitable favorable policy,reasonably regulate it and set necessary favorable system to rid the wide favorable taxation policy to foreign investment.

Key words: foreign investment, favorable taxation policy, legal analysis