Does the Digitalization of Tax Administration Promote Corporate Innovation?

Since the beginning of the 21st century, the rapid advancement of modern information technology has provided new avenues for tax administration reform. The relationship between tax administration and corporate innovation has not been extensively investigated in existing research. Moreover, current literature often assumes that strengthening tax administration suppresses corporate innovation. The research selects A-share listed firms from 2008 to 2021 as the study sample and utilizes the "Golden Tax Phase III" initiative as a quasi-natural experiment. Employing the difference-in-differences (DID) technique, this study examines the effects of tax administration digitalization on corporate innovation. The results suggest that the modernization of tax administration facilitates improvements in corporate innovation. This paper enriches the research on the economic impact of tax administration on enterprises and provides empirical evidence for government departments to leverage digitalization in innovating management approaches, enhancing regulatory capacity, unlocking corporate innovation potential, and deepening tax reform.