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On the basis of identifying macroscopic tax burden rate, income tax rate and type of dual tax exemption as the three major indices, this paper brings forward a new approach of fuzzy cluster analysis for tax planning for location of foreign direct investment. As one of the fuzzy decision approaches, the fuzzy cluster analysis makes use of fuzzy equivalent relation to classify the objects into different categories according to some definite criterion. When it is applied in the tax planning for location of foreign direct investment, the following steps should be followed: Firstly, the fuzzy compatibility matrix is set up by max-min method. Secondly, the fuzzy equivalent matrix satisfying the transitivity condition is deduced by composition computations. Finally, the fuzzy equivalent relation is utilized to cluster the locations of foreign direct investment so that the optimal tax planning choice could be made.