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Digitalization of tax collection and enterprises’ social security compliance

Author

Listed:
  • Changlin Yu

    (Xiamen University
    Xiamen University)

  • Yanming Li

    (Xiamen University)

Abstract

Using the enforcement of the “Golden Tax Project Phase III” (Hereinafter referred to as “GTPIII”) as a quasi-natural experiment, this paper employs Staggered-DID method to comprehensively assess the impact of tax collection digitalization on enterprises’ social security compliance, based on National Tax Survey Data from 2007 to 2015 in China. This paper finds that the “GTPIII” significantly improved enterprises’ actual contribution rate of social insurance and their participation in social insurance. Similar positive effects were observed when various types of social insurance were considered. The “GTPIII” achieved such facilitating effects by promoting the interconnection of tax-related information between departments, discouraging enterprises from concealing contribution bases, and discouraging local governments’ flexible levying behavior. Heterogeneity research reveals that the “GTPIII” has a greater impact on social security compliance in SMEs, private enterprises, low average wage and low profitability enterprises. Further analysis shows that the “GTPIII”, while significantly increasing regional social security fund revenues, has caused enterprises to shift the tax burden by reducing jobs and lowering employee wages, forcing them to take the initiative to increase R&D expenditures.

Suggested Citation

  • Changlin Yu & Yanming Li, 2025. "Digitalization of tax collection and enterprises’ social security compliance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(4), pages 1213-1252, August.
    • Handle: RePEc:kap:itaxpf:v:32:y:2025:i:4:d:10.1007_s10797-024-09867-4
    DOI: 10.1007/s10797-024-09867-4
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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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