Market Access Deregulation and Corporate Tax Compliance: Evidence from China

Sha Yu, Yuan Gao and Jianjun Li

Emerging Markets Finance and Trade, 2025, vol. 61, issue 13, 4266-4286

Abstract: This article utilizes China’s Market Access Negative List reform as a quasi-natural experiment to examine the impact of market access deregulation on corporate tax compliance. Employing a staggered difference-in-differences model with data from listed firms, we document that the reform significantly increases corporate tax compliance. Mechanism analyses reveal that this effect operates through three primary channels: enhanced corporate information transparency, reduced institutional transaction costs, and improved taxpayer satisfaction with government services. Furthermore, private and foreign firms, newly firms and firms with less competitive product markets are more likely to be affected by this reform. Finally, the reform also improves firm’s investment, strengthens firm’s operation capability and reinforces business performance. This article provides a new perspective to understand how the market access deregulation reshapes and improves the relationship between government and market.

Date: 2025
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DOI: 10.1080/1540496X.2025.2513343

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