E-Government and Corporate Tax Planning: International Evidence

60 Pages Posted: 1 Dec 2024

See all articles by Christof Beuselinck

Christof Beuselinck

Catholic University of Lille - IESEG School of Management

Panagiotis Karavitis

University of Glasgow - Adam Smith Business School

Pantelis Kazakis

University of Glasgow

Niswatil Mouna

University of Glasgow

Date Written: November 18, 2024

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

JEL Classification: G30, G38, H26, L1, M41, M48

Suggested Citation

Beuselinck, Christof and Karavitis, Panagiotis and Kazakis, Pantelis and Mouna, Niswatil, E-Government and Corporate Tax Planning: International Evidence (November 18, 2024). Available at SSRN: https://ssrn.com/abstract=5024586 or http://dx.doi.org/10.2139/ssrn.5024586

Christof Beuselinck

Catholic University of Lille - IESEG School of Management ( email )

3 Rue de la Digue
Office: A321
Puteaux, 92800
France
+33320545892 (Phone)

Panagiotis Karavitis

University of Glasgow - Adam Smith Business School ( email )

2 Discovery Place, Room 511 Glasgow
G11 6EY
United Kingdom

Pantelis Kazakis (Contact Author)

University of Glasgow ( email )

Adam Smith Business School
2 Discovery Place
Glasgow, Scotland G11 6EY
United Kingdom

HOME PAGE: http://sites.google.com/site/panteliskazakis/home

Niswatil Mouna

University of Glasgow ( email )

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