After 20 years of economic reforms, China has become one of the most popular host countries for the world's foreign direct investments (FDI). The purpose of this study is to investigate whether or not value-added tax rates play an important role in the level of regional FDI in China. Using 2000-2004's official provinciallevel panel data from the China Statistical Yearbook and empirical model, this study's main finding is that in general, value-added tax rates in all eastern, central, and western areas do not avidly affect the level of regional FDI though lower taxes in the western region do serve to boost investors' willingness to invest. And since the value-added tax rate in the west does, to a certain degree, influence the level of FDI, foreign investors keep a keen eye on the tax incentive policies of the government granted to the particular region. The findings also show that the reasons propelling foreign investors to invest in the three areas vary greatly.