The digitalization of tax collection and administration systems integrates technologies such as big data and cloud computing into tax governance, improving information sharing and oversight. Enhanced tax digitalization strengthens tax supervision, thereby increasing the costs and risks associated with corporate tax avoidance. From a corporate governance perspective, the quality of internal controls also affects firms’ tax avoidance decisions. Therefore, examining the impact of tax collection digitalization on corporate tax avoidance and the moderating role of internal controls is of considerable importance. Based on reforms associated with China’s Golden Tax Project (GTP), this study employs a difference-in-differences approach to examine the relationship among tax collection digitalization, internal controls, and corporate tax avoidance behavior. The results show that implementation of the GTP significantly restrained corporate tax avoidance during the initial stage, although the effect weakened over time. Internal control quality and digital tax administration jointly influence corporate tax avoidance, exhibiting a substitutive moderating effect on the restraining relationship. Specifically, the inhibitory effect of tax collection digitalization is more pronounced among firms with weaker internal controls. In addition, the effects of tax digitalization vary across enterprise types and market competition environments. The restraining effect is stronger for non-state-owned enterprises and firms operating in less competitive regions. In these firms, the moderating role of internal controls is also more significant. Based on these findings, this paper recommends further advancing tax administration digitalization, strengthening corporate internal control systems, and developing more targeted tax policies according to differences in enterprise characteristics.
Liu et al. (Fri,) studied this question.