Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The paper finds that stronger firm digitalization is associated with higher tax revenues across countries, with a one-standard-deviation increase in firm digitalization linked to an increase in tax revenues-to-GDP by up to 3 percentage points, conditional on the level of digitalization of tax administration (GovTech) [3][12][17] - Firm digitalization significantly improves tax compliance among high-risk taxpayers, such as small and informal enterprises, particularly in the service sector, indicating that digitalization broadens the corporate tax base and enhances compliance [3][12][14] - There is a significant synergy between firm digitalization and GovTech, underscoring the importance of promoting both to enhance tax collection [3][12][14] Summary by Sections Introduction - The benefits of government digitalization (GovTech) for tax collection have been well acknowledged, with empirical studies showing that digitalizing tax administration can enhance revenue collection significantly [9] - The relationship between firm digitalization and tax revenues remains largely unexplored, necessitating further research to understand its potential impact on tax collection [10][11] Literature Review - A long-standing literature documents benefits from firm digitalization, including higher growth and resilience to shocks, but the impact on tax revenues is less understood [16][18] - Policies to foster firm digitalization include upgrading internet infrastructure and promoting IT skills, which are essential for enhancing tax compliance [19] Empirical Analyses - The report employs both country-level and firm-level analyses to investigate the relationship between firm digitalization and tax revenues [21][22] - Country-level evidence shows that countries with stronger firm digitalization have higher tax revenues, with a strong positive correlation between business digitalization and tax revenues [23][28] - Firm-level evidence indicates that firm digitalization is associated with a higher probability of paying taxes and larger tax payments, particularly in emerging markets and developing economies [49][58] Conclusions - The findings suggest a dual approach of promoting both GovTech and firm digitalization to enhance tax revenues, highlighting that investments in digitalization will yield future tax revenue increases [14][15]

Core Viewpoint - Flexible employment and new employment forms have become a crucial part of China's labor market, with 84 million new employment form workers accounting for 21% of the total workforce [1] Group 1: Legal Challenges in Flexible Employment - The primary issue is the ambiguous definition of employment entities, leading to difficulties in identifying responsible parties in a multi-entity labor organization [5][6] - The second challenge is the difficulty in defining employment relationships due to the nature of flexible work, where workers can choose when to work and for whom, complicating the recognition of labor relations [6][7] - The third challenge involves the unique protection needs of workers in the digital age, including the lack of regulations on data protection and the management issues arising from algorithmic control [7][8] Group 2: Changes in Labor Relationship Recognition Standards - The recognition of labor relationships in new employment forms faces special challenges, including multi-entity employment and hidden control through technology [10][11] - The traditional standards for recognizing labor relationships need to adapt to the realities of platform-based work, emphasizing the need for a "fact-first" approach in determining labor relations [12] Group 3: Innovations in Social Insurance Systems - There is a need for a tailored social insurance system for flexible workers, as seen in companies like JD.com and Meituan, which are exploring new models for social insurance contributions [14][15] - Current regulations pose challenges for employers to provide social insurance due to the complexity of employment relationships in flexible work [15][16] - Recent pilot programs aim to address these issues by introducing occupational injury insurance and expanding coverage to more workers [16][17] Group 4: Taxation and Compliance Challenges - The blurred lines between labor remuneration and business income present significant challenges for tax compliance in the flexible employment sector [19][20] - The emergence of issues like tax evasion and fraudulent invoicing highlights the need for clearer distinctions and more substantial judgments in tax classifications [20][21] - Future tax reforms should focus on unifying tax policies across regions and leveraging technology to enhance tax collection and compliance in the flexible employment sector [21]