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

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  • 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.

Suggested Citation

  • Haichao Fan & Yu Liu & Nancy Qian & Jaya Wen, 2024. "Technological Adoption and Taxation: The Case of China’s Golden Tax Reform," Tax Policy and the Economy, University of Chicago Press, vol. 38(1), pages 101-122.
    • Handle: RePEc:ucp:tpolec:doi:10.1086/730053
    DOI: 10.1086/730053
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    References listed on IDEAS

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    3. Gordon, Roger & Li, Wei, 2009. "Tax structures in developing countries: Many puzzles and a possible explanation," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 855-866, August.
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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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