INFORMATION TECHNOLOGY, TAX COMPETITION, BENEFIT-COST OF TAX INCENTIVES, LOCAL GOVERNMENT AUTONOMY AND FIRM PERFORMANCE IN VIETNAM

This study investigates the influence of institutional factors, including local fiscal autonomy, provincial tax competition, provincial competitiveness, ICT adoption, and digital transformation on the business performance of enterprises across Vietnam’s provinces and regions from 2017 to 2021. The research employs cross-sectional regression to estimate provincial tax competitiveness, a benefit–cost analysis framework for assessing tax incentives, and the dynamic GMM method for panel data estimation. The findings reveal that tax competition exerts a negative impact on firm performance, indicating that preferential tax policies in economically disadvantaged areas do not necessarily stimulate investment or enhance operational efficiency. Conversely, the benefit–cost ratio of tax incentives shows a significant positive effect on performance, highlighting that incentives are effective only when their benefits outweigh associated costs. Furthermore, the composite fiscal autonomy index (Automany2) exhibits a negative relationship with firm efficiency, suggesting limitations in the current revenue allocation mechanism. These results offer important policy implications for reforming tax incentives, moderating tax competition, and restructuring fiscal autonomy frameworks to foster business performance in Vietnam’s provinces and cities.