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Pre-Tax Deduction Policy for Employee Education Expenses and Corporate Digital Transformation: Evidence From China

Year: 2025

Type: article

Abstract: The digital economy is a cornerstone of high-quality development and sustainability. This study employs a difference-in-differences approach to investigate how tax incentives, specifically those induced by the pre-tax deduction of employee education expenses, influence corporate digital transformation. We find that increasing the pre-tax deduction ratio for employee education expenses significantly promotes corporate digital transformation, with the effect being more pronounced in non-state-owned enterprises, start-ups, declining firms, companies with higher tax burdens, and firms facing severe financing constraints. Mechanism tests reveal that the policy primarily drives corporate digital transformation through three core channels: alleviating financing constraints, upgrading human capital, and fostering innovation-driven initiatives. These findings provide valuable policy insights for deepening supply-side structural reforms and achieving high-quality economic development.

Source: SAGE Open

DOI: 10.1177/21582440251342086

Authors: Huiqiang Ni, Zhen Yang, Wenlong Liu, Jianxia Cui

Institutions: Dongbei University of Finance and Economics, Jiangsu Ocean University, Anhui University of Finance and Economics, China Construction Bank

Language: English

Topic: Digital Economy and Transformation

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $1,600