Digital Technology and Corporate Tax Avoidance: An Integrative Literature Review

Abstract

This paper offers an in-depth literature review of the role of digital technology in the tax ecosystem, investigating its reciprocal relationships with corporate tax avoidance. We combine an integrative literature review (ILR) with the ecosystem approach to analyse 38 recent papers addressing the effects of digital technology on: (i) corporate tax avoidance; (ii) tax authorities in counteracting corporate tax avoidance; and (iii) the reverse outcome, where digital technology growth is driven by tax avoidance. The review shows that digital technology affects corporate taxpayers and tax collectors differently and reveals interdependence among contexts (accounting, law, and economics) in explaining these outcomes. Digital technology creates both challenges and opportunities for tax accounting and regulation, influencing transparency and the likely effectiveness of tax law provisions. The literature also documents reverse causality, whereby tax policies can induce growth in the adoption of digital technology. Permanent establishment, Digital Services Tax, Common Reporting Standard, eXtensible Business Reporting Language, blockchain technology, cryptocurrencies, e-commerce, digital finance, and digital transformation are particularly key technologies addressing corporate tax avoidance. This review contributes to tax research by integrating literature that provides evidence across tax accounting, tax law, and tax policy and economics. It also clarifies research gaps, highlighting a new stream of studies on ‘digital tax research’ and offering a comprehensive understanding of the role of digital technology in the tax ecosystem.