Jakarta – Digital transformation is not only improving business efficiency but is also helping companies reduce tax avoidance. This is the main finding of a study conducted by Rika Nur Widiastutik from Universitas Negeri Surabaya, published in 2026 in the International Journal of Scientific Multidisciplinary Research. The research reveals that companies implementing digital technologies are less likely to engage in aggressive tax avoidance, particularly when supported by strong corporate governance. The findings provide valuable insights for businesses, regulators, and investors seeking to improve transparency and tax compliance.
Corporate tax avoidance has long been a major concern because, although many tax planning strategies remain within legal boundaries, they can significantly reduce government revenue. In developing countries such as Indonesia, tax income plays a crucial role in financing public services, infrastructure development, education, healthcare, and other national development programs. Consequently, strengthening corporate tax compliance has become one of the government's priorities alongside accelerating digital transformation across both public and private sectors.
Against this backdrop, digital transformation has emerged as more than simply adopting new technologies. It involves integrating digital systems, automation, data analytics, cloud computing, and digital reporting into everyday business operations. Such integration enables companies to process financial information more accurately, maintain comprehensive documentation, improve internal controls, and make transactions easier to trace. These improvements reduce opportunities for opaque accounting practices that often facilitate aggressive tax planning.
To examine this relationship, Rika Nur Widiastutik analyzed secondary data from 500 observations of non-financial companies listed on the Indonesia Stock Exchange between 2020 and 2024. Information was collected from annual reports, financial statements, and official corporate disclosures. The study employed panel data regression to evaluate how digital transformation influences tax avoidance and whether corporate governance strengthens this relationship.
The findings demonstrate a significant negative relationship between digital transformation and tax avoidance. Companies with higher levels of digital transformation consistently reported lower levels of tax avoidance. The regression coefficient of -0.126 indicates that improvements in digital transformation are associated with a measurable reduction in aggressive tax planning. According to the study, better digital systems increase transparency, strengthen internal reporting, and reduce managerial discretion in tax-related decisions.
The research further highlights the importance of corporate governance. The interaction between digital transformation and corporate governance produced a significant coefficient of -0.157, confirming that governance mechanisms enhance the effectiveness of digital transformation in reducing tax avoidance. Companies with stronger governance structures, particularly those with higher proportions of independent commissioners and stronger oversight mechanisms, achieve greater improvements in tax compliance after adopting digital technologies.
The study also examined several financial characteristics that may influence corporate tax behavior. Larger companies were found to engage in lower levels of tax avoidance, likely because they receive greater scrutiny from regulators, investors, and the public. Similarly, more profitable companies tended to avoid aggressive tax planning due to higher reputational and regulatory risks. In contrast, firms with higher leverage showed greater incentives to reduce taxable income through debt-related tax benefits. Meanwhile, sales growth was not found to have a statistically significant relationship with tax avoidance.
To verify the consistency of its conclusions, the research conducted robustness tests using an alternative measure of tax avoidance. The results remained unchanged. Digital transformation continued to show a significant negative effect on tax avoidance, while corporate governance consistently strengthened this relationship. These additional tests reinforce the reliability of the study's conclusions and demonstrate that the findings are not dependent on a single measurement approach.
According to Rika Nur Widiastutik from Universitas Negeri Surabaya, digital transformation should not be viewed solely as an investment in operational efficiency. Instead, digital technologies also serve as powerful governance tools by improving information quality, strengthening transparency, enhancing accountability, and reducing information asymmetry between managers and stakeholders. When supported by effective corporate governance, digital transformation becomes a mechanism that discourages opportunistic managerial behavior, including aggressive tax avoidance.
The findings have important implications for businesses and policymakers. For companies, investing in digital transformation can improve financial reporting quality, enhance investor confidence, reduce legal and reputational risks, and strengthen long-term sustainability. For regulators, the study provides empirical evidence that digital tax administration reforms should be accompanied by stronger corporate governance standards to maximize tax compliance. Encouraging both digital innovation and sound governance may therefore become an effective strategy for increasing state revenue while promoting greater corporate accountability.
Overall, the study concludes that digital transformation and corporate governance should be viewed as complementary mechanisms rather than separate initiatives. Digital technology provides the infrastructure for greater transparency, while effective governance ensures that technological capabilities are used responsibly. Together, they create an environment in which aggressive tax avoidance becomes increasingly difficult, ultimately supporting fairer taxation and more sustainable economic development in Indonesia.
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DOI: https://doi.org/10.55927/ijsmr.v4i6.215
Journal Link: https://journalijsmr.my.id/index.php/ijsmr
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