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Technological Adoption and Taxation: The Case of China’s Golden Tax Reform

In: Tax Policy and the Economy, Volume 38

Author

Listed:
  • Haichao Fan
  • Yu Liu
  • Nancy Qian
  • Jaya Wen

Abstract

This paper investigates the effect of Phase 2 of the Golden Tax Project on the value-added tax (VAT) in China. The reform introduced computer-generated invoices and electronic transaction linking. Using a difference-in-differences strategy, we show that the reform increased VAT by reducing exaggerated VAT deductions. The introduction of the new digital technology had large positive effects on Chinese fiscal capacity. VAT gains from the reform explain approximately 13.7% of VAT growth during 1998–2007.
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Suggested Citation

  • Haichao Fan & Yu Liu & Nancy Qian & Jaya Wen, 2024. "Technological Adoption and Taxation: The Case of China’s Golden Tax Reform," NBER Chapters, in: Tax Policy and the Economy, Volume 38, pages 101-122, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14906
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    References listed on IDEAS

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    4. Li, Lixing & Liu, Kevin Zhengcheng & Nie, Zhuo & Xi, Tianyang, 2021. "Evading by any means? VAT enforcement and payroll tax evasion in China," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 770-784.
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    Cited by:

    1. Adrienne Lees & Maria Jouste & Nicholas Musoke & Joseph Okello Ayo, 2025. "The panopticon taxman: the impact of e-invoicing on VAT compliance in Uganda," WIDER Working Paper Series wp-2025-112, World Institute for Development Economic Research (UNU-WIDER).
    2. Chang, Gene H. & Chen, Ye & Chang, Kathryn J., 2025. "Assessing effective VAT rates and tax efficiency at industry-level: The case of China," China Economic Review, Elsevier, vol. 93(C).

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    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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