Tax competition is done by the government primarily to attract foreign direct investment. So that the international companies will approach countries where there are less taxes and certain tax exemptions. Tax competition, a form of regulatory competition, exists when governments use reductions in fiscal burdens to encourage the inflow of productive resources or to discourage the exodus of those resources. Often, this means a governmental strategy of attracting foreign direct investment, foreign indirect investment (financial investment), and high value human resources by minimizing the overall taxation level and special tax preferences.