Over the past 40 years of reform and opening up, China’s use of foreign direct investment (FDI) has had all-round, multilevel, and wide-ranging implications. In the early stages of reform and opening up to attract foreign capital inflow to the country, relatively strong tax-preferential policies were implemented. The main purpose of this study is to analyze the impacts of FDI and foreign-related taxation on China’s total tax revenues as well as explore the direct and indirect effects of FDI on China’s taxation over the last 40 years to compare the contributions of FDI in different regions of China. Based on the results, some suggestions are proposed for the adjustment of China’s policies to promote foreign capital inflow in the future; moreover, suggestions are also provided for using foreign capital to stabilize employment and foreign trade, while promoting taxation.