Tax policies and incentives play a big role in attracting foreign investment. While tax breaks can be helpful, they don't fix all problems in a country's investment environment. Improving infrastructure and government policies is more effective in the long run. However, recent evidence shows that taxes can influence where companies choose to invest, especially when other factors are similar. Different types of tax systems can impact investment decisions differently. Tax incentives can also lead to lower government revenues and encourage corruption. Further research is needed to understand how tax rates and policies affect multinational companies' investment choices and the types of foreign investment they make.