Spillover effects of VAT Self-enforcement properties:Evidence based on the replacement of business tax with VAT reform

In accordance with the purchasing tax-deduction method and the receiptbased value added tax(VAT)system,the same transaction can be recorded by two firms,which creates self-enforcement properties,thereby restraining tax avoidance.Using the Replacement of Business Tax with VAT reform in China,this paper adopts a difference-in-differences design to investigate the spillover effects of VAT self-enforcement properties on corporate income tax avoidance by manually collating information about suppliers/clients of listed firms.As the listed firms’suppliers/clients switch from paying business tax to paying VAT,there is a striking decline in their corporate income tax avoidance behavior.This effect is pronounced in firms with closer upstream and downstream correlations,higher information complexity and stronger incentives for tax avoidance.