The influence of tax information technology,power and integrity on tax compliance among SMES in China

Tax evasion poses significant challenges, prompting governments to adopt various strategies to enhance taxpayer compliance. In China, this challenge is particularly pronounced among small and medium-sized enterprises, which are critical to the national economy yet frequently struggle to fulfil their tax obligations, resulting in substantial compliance gaps. Historically, the Chinese government has relied heavily on stringent regulatory measures and the exercise of governmental authority to deter noncompliance. However, widespread concerns regarding the integrity of tax officials have significantly diminished the effectiveness of these approaches. In recent years, the widespread application of information technology in tax administration has gradually transformed the regulatory landscape and subtly influenced taxpayer behaviour. Against this backdrop, the present study examines the impact of governmental power, the integrity of tax officials, and information technology on tax compliance, as well as their roles in fostering taxpayer trust. Drawing on data collected from a questionnaire survey of 407 small and medium-sized enterprises, the analysis demonstrates that power, integrity, and IT each exert a significant effect on tax compliance, with advanced information technology showing the most substantial influence. This finding indicates that, compared to traditional supervisory methods employed by tax authorities, the integration of information technology into tax administration has begun to reshape the compliance environment, and may become the most critical determinant of taxpayer behaviour in the future. Furthermore, the mediating effects of power, integrity, and IT on taxpayer trust are also found to be significant, underscoring the increasing importance of trust in the compliance process.Among these factors, the integrity of tax officials emerges as the most influential determinant of taxpayer trust. Overall, this study confirms the distinct effects of information technology, governmental power, and the integrity of tax officials on tax compliance in China. It not only highlights how improvements in regulatory enforcement (power), institutional integrity (integrity), and technological tools (information technology) can enhance compliance, but also offers a fresh perspective on the role of taxpayer and tax authority relationships in addressing compliance challenges. Ultimately, the study provides a strong theoretical foundation and empirical support for efforts aimed at improving tax compliance, promoting tax equity, and optimising the efficiency of tax administration.