Abstract: Taking the A-share listed companies in China’s Shanghai and Shenzhen stock markets from 2011 to 2015 as the research objects, this paper conducts an empirical test on the impact of the “replacing business tax with VAT” policy on the value relevance of corporate investment on the basis of a theoretical analysis, and then it further discusses the regulating effect of enterprises’ tax shifting ability on the relationship between the two. The findings show that the“replacing business tax with VAT” policy has promoted the value relevance of corporate investment on the whole, and the stronger the tax shifting ability of enterprises, the more significant the effect of“replacing business tax with VAT”on the value relevance of corporate investment will be. After distinguishing the nature of control power, it is found that compared with the state-owned enterprises, the“replacing business tax with VAT”has significantly promoted the value relevance of the investment made by non-state-owned enterprises, and the regulation effect of the tax shifting ability of enterprises on the relationship between the two is significant only in non-state-owned enterprises. The conclusions of the study indicate that the“replacing business tax with VAT”has an optimizing effect on the efficiency of resource allocation in the capital markets, which can provide experience support for the government to improve the follow-up policies.

Key words: replacing business tax with VAT; tax shifting capability; value relevance of corporate investment; nature of control power