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<p>For tax administration to effectively curb corporate tax evasion, tax authorities must possess the motivation to enhance tax effort and adopt audit strategies that align with current evasion practices. Centralized tax oversight in China encompasses internal audits targeting tax authorities and cross-regional investigations targeting taxpayers. Using the establishment of the State Taxation Administration (STA) regional offices as a quasi-natural experiment, this study empirically examines the impact of centralized tax oversight on corporate tax evasion. A multi-period difference-in-differences analysis reveals that the establishment of STA regional offices significantly reduces tax evasion. Mechanistically, this reduction is achieved through increased tax effort by local tax authorities and a suppression of abusive related-party transactions by firms. Further analysis indicates substantial heterogeneity in these effects across firms of varying sizes and ownership structures and highlights the welfare implications of the policy. </p>

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Tax audit, cross-regional investigations, and corporate tax evasion

  • 期刊论文

  • 发表日期：

    2026年1月12日

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  • Yukun Sun,
  • Lei Song

摘要

For tax administration to effectively curb corporate tax evasion, tax authorities must possess the motivation to enhance tax effort and adopt audit strategies that align with current evasion practices. Centralized tax oversight in China encompasses internal audits targeting tax authorities and cross-regional investigations targeting taxpayers. Using the establishment of the State Taxation Administration (STA) regional offices as a quasi-natural experiment, this study empirically examines the impact of centralized tax oversight on corporate tax evasion. A multi-period difference-in-differences analysis reveals that the establishment of STA regional offices significantly reduces tax evasion. Mechanistically, this reduction is achieved through increased tax effort by local tax authorities and a suppression of abusive related-party transactions by firms. Further analysis indicates substantial heterogeneity in these effects across firms of varying sizes and ownership structures and highlights the welfare implications of the policy.