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Digital tax communication and the effectiveness of tax incentives: Evidence from China’s high-tech sector

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  • Xu, Rui
  • Wu, Lei

Abstract

This paper examines how digital tax communication platforms shape the effectiveness of fiscal incentives, using the introduction of China’s 12366 Tax Message Board as a natural experiment. Drawing on firm-level data from the high-tech sector, we find that the enhanced policy transparency amplifies the revenue effects of tax refund policies. These effects are most pronounced in provinces with higher levels of digital engagement between firms and tax authorities. In contrast, firms in low-engagement environments display attenuated responses, underscoring the informational frictions that constrain policy uptake. The results highlight the role of digital administrative infrastructure in enhancing the innovation-oriented impact of tax policy.

Suggested Citation

  • Xu, Rui & Wu, Lei, 2025. "Digital tax communication and the effectiveness of tax incentives: Evidence from China’s high-tech sector," Finance Research Letters, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finlet:v:84:y:2025:i:c:s1544612325010980
    DOI: 10.1016/j.frl.2025.107840
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