Digital Transformation and Corporate Tax Avoidance: Evidence from Moroccan Listed Firms

Anas Azenzoul (), Nacer Mahouat, Khalil Mokhlis and Abdellatif Moussaid ()
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Anas Azenzoul: Department of Management Science, The Faculty of Legal, Economic, and Social Sciences, Cadi Ayyad University of Marrakech, Marrakech 40000, Morocco
Nacer Mahouat: Department of Management Science, The Casablanca Higher School of Technology, Hassan II University of Casablanca, Casablanca 20000, Morocco
Khalil Mokhlis: Department of Management Science, The Faculty of Legal, Economic, and Social Sciences, Cadi Ayyad University of Marrakech, Marrakech 40000, Morocco
Abdellatif Moussaid: College of Agriculture and Environmental Sciences, University Mohammed VI Polytechnic (UM6P), 660 Lot, Benguerir 43150, Morocco

JRFM, 2025, vol. 18, issue 10, 1-22

Abstract: This study aims to investigate the impact of digital transformation on corporate tax avoidance. In fact, this revolution has pervasively affected firms in different aspects and represents a significant opportunity to modernize their internal processes, bringing alongside a set of challenges that they must overcome. One hypothesis posits that digitalization enhances information transparency and internal control, reducing tax avoidance, while the other one suggests that the increase in digitalization leads to more complex and opaque transactions, leaving avenues for more aggressive tax strategies. This paper uses data of listed firms in the Casablanca Stock Exchange from 2020 to 2024, excluding the financial sector due to its specific tax regulation, leaving a final sample of 56 companies and 272 firm-year observations. It applies an OLS regression to assess the relation between the two variables, controlling for a set of firm and governance characteristics. The aim of the article is to address the scholarly debate by providing insights into an emerging economy where there is little research on the subject. The findings reveal that digital transformation contributes to the decrease in corporate tax avoidance in conjunction with governance variables like the presence of independent directors on the board and the duality of a CEO position, strongly supporting the first hypothesis. Notably, the OLS regression results show that an increase in digitalization by 1 point is associated with a decrease of 40.4755 in the book-tax differences, significant at the 5% level. The results provide high support for firms to invest in technologies in order to optimize their internal processes and improve their data quality; it also calls for tax authorities to strengthen their digital audit capacities and integrate data-driven tools to detect and interpret signals of potential tax-aggressive strategies.

Keywords: tax avoidance; digitalization; tax aggressiveness; artificial intelligence; corporate governance (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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