E-government and corporate tax planning: International evidence

Christof Beuselinck, Panagiotis Karavitis, Pantelis Kazakis and Niswatil Mouna

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the impact of e-government advancements on corporate tax planning activities. We define e-government as the readiness and capacity of national institutions to use information and communications technologies to deliver public services. Using over 82,000 worldwide firm-level data from 10,936 unique firms in 56 countries over the period 2008-2021, we observe a negative association between a country’s e-government advancement and the overall tax avoidance practices of firms. Via path analysis we identify the underlying mechanisms through which e-government affects corporate tax avoidance and document that the total tax enforcement budget but also specific technological features such as AI-machine learning, and robotic process automation explains a sizeable fraction of the negative relationship between e-government advancements and corporate tax avoidance. Additionally, our cross-sectional analysis reveals that the impact of e-government on curbing tax planning is particularly pronounced in environments where firms traditionally accrue tax benefits via investments into organizational capital. Our main findings remain robust after implementing an instrumental variables strategy and conducting various robustness tests. Collectively, our findings indicate that e-government investments can help raise a nation’s tax revenue collection, as such investments are linked to reduced corporate tax avoidance activities.

Keywords: tax avoidance; tax planning; digitalization; e-government; digital governments (search for similar items in EconPapers)
JEL-codes: G30 G38 H26 L1 M41 M48 (search for similar items in EconPapers)
Date: 2024-11-18
New Economics Papers: this item is included in nep-acc, nep-ict, nep-iue, nep-pbe and nep-pub
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