This paper discusses the relationship between bilateral tax treaties and foreign direct investment (FDI). Basically, tax treaties may promote foreign direct investment via the alleviation of double taxation. However, tax treaties may also be signed to restrict tax avoidance, which, in turn, may hamper FDI. From a theoretical perspective, the overall impact of tax treaties on FDI remains ambiguous, rendering it an empirical question whether tax treaties promote or hinder FDI. The existing empirical studies overwhelmingly find a negative association between tax treaties and FDI, suggesting that the implementation of a treaty is accompanied by a loss in FDI in subsequent years.