Compliance dividend: a study on the inhibitory effect and mechanism of corporate digital transformation on tax avoidance

Utilizing text analysis of annual reports and econometric modeling, this research investigates how digital transformation influences corporate tax avoidance. It is found that corporate digital maturity is significantly negatively correlated with tax avoidance, and this inhibition is particularly prominent in state-owned enterprises, non-technology-intensive industries, non-high-tech fields and high-pollution industries. Mechanism tests show that digital transformation inhibits tax avoidance through a threefold path: (1) information transparency enhancement, relying on automated financial reporting and data integration systems to reduce information asymmetry; (2) internal control enhancement, improving compliance governance with artificial intelligence monitoring and blockchain auditing technology; (3) Financing constraint alleviation, optimizing financing channels through digital platforms and reducing the incentives for enterprises to rely on tax avoidance for liquidity. At the theoretical level, the study proposes the “digital compliance dividend” hypothesis, which suggests that enterprises strategically strengthen their compliance capabilities through digital infrastructure, creating synergies between technology and governance in environments with strong institutional regulation (e.g., state-owned enterprises). Policy implications highlight the need to design digital incentives for small and medium-sized enterprises (SMEs) and polluting industries, and suggest that tax authorities deploy AI-enhanced systems for real-time monitoring to modernize tax governance in the era of Industry 4.0. This study provides new perspectives for understanding the fiscal effects of digital transformation and provides empirical evidence for building a fair and efficient tax system.