Abstract: PPP(Public-Private Partnership) can reduce the government's fiscal expenditure pressure and improve the efficiency of public service provision, which is widely used in China. In PPP projects, Private companies as the social capital establishes a special interest relationship with the government, which facilitates the explicit or implicit tax benefits, thus reducing their tax liability. Based on the data of the financial report disclosed by the listed company, the paper uses PSM-DID to study the quasi-natural experiment in the influence of the PPP project on its tax liability. Results show that companies involved in the PPP project improve the degree of tax avoidance, reduce the tax liability. The effect is statistically significant in construction industry, however tax increase in municipal construction industry such as electricity, heat companies. From the regional perspective, the companies in the eastern and central regions have significantly reduced their tax rates on the PPP projects, while the western regions are not statistically significant. The main policy implications are while governments strictly enforce explicit tax breaks, they should specify implicit interest between between government and companies who involved in PPP projects to prevent the active or passive tax benefits given to the companies.

Key words: public-private partnership, tax liability, quasi-natural experiment