Digital Upgrading of Tax Administration and Corporate Income Tax Expense Discrepancies among Listed Companies

Corporate income tax expense and the financial indicators constructed on its basis are commonly used sources of information for studying corporate income tax noncompliance and provide important reference value for identifying, monitoring, and combating corporate tax avoidance. Using data on listed companies from the CSMAR and National Tax Survey databases for 2011–2016, this study constructs an indicator of corporate income tax expense discrepancies to measure corporate tax avoidance. It treats the staggered rollout of the Golden Tax Phase III Project as a quasi-natural experiment and employs an overlapping difference-in-differences approach to examine the effect of the digital upgrading of tax administration on corporate income tax expense discrepancies. The results show that the digital upgrading of tax administration significantly reduces corporate income tax expense discrepancies, and that the development of information technology by tax authorities can effectively constrain corporate income tax noncompliance. The digital upgrading of tax administration not only curbs corporate earnings management but also improves firms' internal controls, thereby helping reduce corporate income tax expense discrepancies. Its inhibitory effect on such discrepancies is more pronounced when tax authorities have stronger enforcement capacity, firms have poorer corporate governance, or tax authorities devote less attention to firms. These findings not only contribute to a reassessment of corporate tax avoidance in China but also offer important implications for promoting high-quality economic development by creating a fair and standardized tax environment, harnessing the incentive effects of tax and fee reductions, and stimulating market vitality.