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Governance perspectives on double tax treaties and foreign direct investment: Do bilateral double taxation treaties matter?
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Thi Thuy Duong Nguyen 
, Kieu Oanh Ha , Huong Thao Dinh
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
This paper examines the impact of double taxation treaties on foreign direct investment (FDI) inflows into Vietnam from 50 countries between 2001 and 2021. The findings show a significant and positive effect of double taxation treaties (DTTs) on FDI inflow to the host country, indicating that DTTs mitigate tax-related uncertainties and costs for investors. The study extends the literature by exploring the interaction between DTTs on FDI inflows. The research is more advanced than prior research on the relationship between DTTs and FDI (Neumayer, 2007; Murthy & Bhasin, 2015; Braun & Fuentes, 2016) as it addresses dynamic endogeneity and potential causality between macroeconomic factors by employing system generalized method of moments (GMM) estimation. The result reveals that the weak institutional framework and governance of the host country can alleviate this positive impact of DTTs on inward FDI. To fully leverage the benefits of DTTs in attracting FDI inflows, policymakers must prioritize enhancing the institutional environment and governance, particularly in light of new challenges posed by heightened geopolitical uncertainty and the establishment of the global minimum tax.
Keywords: FDI, Double Taxation Treaties, International Tax, Vietnam
Authors’ individual contribution: Conceptualization — T.T.D.N.; Methodology — K.O.H.; Validation — T.T.D.N.; Resources — H.T.D.; Data Curation — H.T.D.; Writing — Original Draft — K.O.H.; Writing — Review & Editing — T.T.D.N.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: F21, F62, G18
Received: 09.05.2025
Revised: 14.05.2025; 19.07.2025; 10.10.2025
Accepted: 20.10.2025
Published online: 23.10.2025
How to cite this paper: Nguyen, T. T. D., Ha, K. O., & Dinh, H. T. (2025). Governance perspectives on double tax treaties and foreign direct investment: Do bilateral double taxation treaties matter? [Special issue]. Corporate Law & Governance Review, 7(3), 202–210. https://doi.org/10.22495/clgrv7i3sip5
