Is corporate digital transformation a tax haven?

Abstract

PurposeCorporate digital transformation (CDT) has challenged traditional tax administration systems. This study examines the impact of CDT on tax avoidance behavior and tests whether tax authorities can identify this behavior.Design/methodology/approachUsing data on listed companies on the Shanghai and Shenzhen Stock Exchanges from 2008 to 2020, this study applies the Heckman two-stage and cross-section models.FindingsThe results show that the higher the degree of CDT, the more aggressive the tax avoidance behavior. The CDT's impact on corporate tax avoidance is more significant under strong government tax efforts.Originality/valueThis study expands research on the economic consequences of CDT and the factors influencing corporate tax avoidance behavior. Moreover, it has important implications for governments to monitor tax avoidance behavior under the CDT, improve digital tax systems, and pay more attention to the tax administration of digital assets.

Evaluating the Impact of Digital Transformation and Sustainability Strategies on Earnings Management: A Text Mining Approach

“…In the capital market stream, Wu et al (2022) argued that digital transformation could greatly lower the danger of stock price crashes by lowering information asymmetry, enhancing information transparency, bolstering internal control, enhancing information disclosure, and organizational performance. However, in the taxation stream, Chen and Meng (2023) found a negative association between the degree of corporate digital transformation and tax compliance. Using data from companies listed on the Shanghai and Shenzhen stock exchanges, the study found that the greater the degree of digital transformation, the more aggressive corporate tax avoidance behavior was.…”