Technological Forecasting & Social Change 166 (2021) 120597

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Technological Forecasting & Social Change

journal homepage: www.elsevier.com/locate/techfore

Can e-government initiatives alleviate tax evasion? The moderation effect

of ICT
Ali Uyar a, *, Khalil Nimer b, Cemil Kuzey c, Muhammad Shahbaz d, Friedrich Schneider e
a
CERIIM, Excelia Business School, France
b
Gulf University for Science and Technology, Kuwait
c
Arthur J. Bauernfeind College of Business, Murray State University, Murray, KY 42071, United States
d
School of Management and Economics, Beijing Institute of Technology, China
e
Research Institute of Banking and Finance, Johannes Kepler University of Linz, Austria

A R T I C L E I N F O A B S T R A C T

Keywords: Drawing on modernization and institutional theories, this study tests the association between the digitalization of
Long-term vision government services and tax evasion via the moderation effect of information and communication technologies
E-government (ICTs). The study’s sample covers the years between 2006 and 2017 and contains 1677 country-year observa­
ICT
tions. The results of fixed effect analysis indicate that the six proxies for governments’ long-term vision and the
Digitalization
digitalization of government services all play a significant role in alleviating tax evasion. Moreover, ICT adoption
Taxation
Tax evasion by society and citizens positively moderates the association between the digitalization of government services
and tax evasion; that is, the digitalization of government services has a stronger effect on mitigating tax evasion
in countries where ICT adoption is higher. The study suggests several implications for leveraging ICT in public
service delivery, which may help countries reduce tax evasion and increase tax revenue. Specifically, public
authorities should improve e-government structures and e-filing systems to facilitate taxpayers’ income tax
declarations and payments.

1. Introduction relationship between the digitalization of government services and

In the last couple of decades, governments around the world have
followed the private sector in using the internet to connect with their
citizens, having become aware that internet technologies can simplify
government services and increase their efficiency (Singh et al., 2004).
Therefore, many governments have introduced national e-government
systems to deal more dynamically with the growing demand by citizens
and businesses for effective government services. According to Bouna­
bat (2017), in response to the rapid pace of globalization, the spread of
information and communication technologies (ICTs), and the knowl­
edge revolution, governments with long-term vision and perspective
started implementing e-government practices. Bearing in mind the
increasing recognition of ICTs’ importance for governance, this paper
poses the following research questions: Given the argument that the
digitalization of government services increases government efficiency,
do e-government initiatives contribute to alleviating tax evasion?
Moreover, would ICT adoption by society and citizens strengthen the
lower tax evasion?
E-government is increasingly becoming an indicator of government
efficiency and has become one of the most important means for
measuring the digital transformation level of public services. E-gov­
ernment is also used to improve the transparency and credibility of
public administration and to tackle all kinds of corruption (Zhang and
Zhang, 2009) due to the wide range of digital opportunities provided by
ICTs (Adam, 2020). E-government refers to “the use of information
technology to enable and improve the efficiency with which government
services are provided to citizens, employees, businesses, and agencies”
(Carter and Bélanger, 2005, p. 5). In other words, e-government involves
using ICTs to deliver public services to citizens and to make governments
more effective and efficient (Srivastava and Teo, 2010). Palvia et al.
(2017) define e-government as the use of ICTs by government agencies.
Therefore, ICT use could be an indicator of a government’s digitalization
level: the more digital services, procedures, applications, operations,
and transactions, the higher the level of e-government.

* Corresponding author.
E-mail addresses: aliuyar@hotmail.com (A. Uyar), Ahmadnimer.k@gust.edu.kw (K. Nimer), cemilkuzey@gmail.com (C. Kuzey), muhdshahbaz77@gmail.com
(M. Shahbaz), Friedrich.Schneider@jku.at (F. Schneider).

https://doi.org/10.1016/j.techfore.2021.120597
Received 29 August 2020; Received in revised form 5 December 2020; Accepted 9 January 2021
Available online 18 January 2021
0040-1625/© 2021 Elsevier Inc. All rights reserved.
A. Uyar et al.
In general, the literature related to ICT use in the context of taxation
focuses exclusively on the digitalization of tax procedures and supports
the argument that the level of compliance in taxation is improved by
simplifying tax procedures, tax-filing systems, and tax payments via
electronic services (Sidani et al., 2014; Tjen and Evans, 2017; Night and
Bananuka, 2019). In this context, Brondolo et al. (2008) argued that tax
revenues could be favorably affected by reforming the tax system. Also,
Sidani et al. (2014) stated that tax evasion would decline in countries
with more efficient governance and tax systems in terms of collecting
taxes and spending tax revenues. Moreover, an efficient tax system can
provide a compact regulatory framework and institutional foundations
that can minimize tax evasion (Tjen and Evans, 2017). Empirically,
Decman et al. (2010) examined the impact of ICT use on the efficiency of
government procedures. They focused on ICT investment for simplifying
cumbersome tax procedures in Slovenia and found that ICTs do not
generate cost efficiency; however, ICTs do offer several non-financial
advantages, such as the elimination of paper associated with tax
returns, a decrease in formal control activities, and the instant avail­
ability of tax data. Also, Night and Bananuka (2019) examined the
mediating effect of adopting an e-tax system on the association between
the attitude toward the e-tax system and tax compliance in small and
medium-sized business enterprises in Africa. The results suggested that
the adoption of an e-tax system and the attitude toward the e-tax system
are significant predictors of tax compliance.
The e-government literature has also concentrated on the role of e-
government in fighting corruption by arguing that the digitalization of
government services would increase government efficiency and effec­
tiveness and, consequently, would decrease corruption levels in gov­
ernments (Nam, 2018; Linhartová, 2019; Suhendi et al., 2020; Adam,
2020). At the same time, the past literature has repeatedly described
corruption as one of the main driving factors of tax evasion. In this re­
gard, Ajaz and Ahmad (2010) described corruption as a key issue in tax
administration. Alm and Liu (2017) examined the relationship between
corruption, taxation, and tax evasion and concluded that corruption is a
statistically and economically significant determinant of tax evasion.
Also, the cross-country study by Baum et al. (2017) found that corrup­
tion is negatively associated with tax revenues. Many earlier studies
reported similar results (Seidel and Thum, 2016; Rosid et al., 2016;
Swanepoel and Meiring, 2017; Marriott, 2017; Schlenther, 2017).
Therefore, tax evasion can be defined as the intended illegal practice of
not paying taxes by not reporting revenues or reporting unacceptable
expenses to reduce the amount of payable tax (Hilman 2009), with
bribery of government officials being the most common means of tax
evasion (Ahmad and Brookines, 2007; Ajaz and Ahmad, 2010; Faridy
et al., 2016; Tanzi, 2017; Lewis, 2017). In addition, many empirical
studies have found a positive association between corruption in general
and the level of tax evasion (Ajaz and Ahmad, 2010; Alm and Liu, 2017;
Alm et al., 2016; DeBacker et al., 2015; Marjit et al., 2017).
Consequently, the digitalization of government services could alle­
viate tax evasion in two ways: First, improving tax procedures in general
and the tax-filing system in particular would improve the efficiency of
the tax system and, consequently, increase tax compliance (Decman
et al., 2010; Bhuasiri et al., 2016; Night and Bananuka, 2019). Second,
the improved efficiency and effectiveness of the government would lead
to lower corruption (Andersen, 2009; Sheryazdanova and Butterfield,
2017; Nam, 2018; Park and Kim, 2020; Suhendi et al., 2020) and,
consequently, lower tax evasion.
However, previous studies have been unable to provide compre­
hensive and convincing evidence regarding the association between the
digitalization of government services and tax evasion—they either
investigated how tax reforms and the simplification of tax filing, tax
payment, and tax procedures could improve the level of tax compliance
in certain countries (Sidani et al., 2014; Night and Bananuka, 2019), or
they empirically examined how adopting e-tax systems affects the level
of tax compliance in certain countries (Decman et al., 2010; Night and
Bananuka, 2019). Therefore, while the aforementioned studies
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Technological Forecasting & Social Change 166 (2021) 120597
concentrated exclusively on the connection between e-tax systems and
tax compliance, this study adopts a broader and more in-depth approach
by using six proxies to assess whether e-government initiatives reduce
tax evasion. Finally, this study, unlike prior scholarship, also considers
whether the level of ICT adoption among citizens positively affects the
connection between e-government initiatives and tax evasion.
Responding to the research gaps identified above, first, this study
contributes to the existing literature by drawing on modernization and
institutional theories (Barker, 2003) to investigate ICTs’ influence on
improving the tax system, increasing tax compliance, and reducing tax
evasion via e-government practices (Gërxhani, 2004; Williams et al.,
2015; Williams and Horodnic, 2016). Researchers have overlooked
modernization theory in the context of tax evasion. Modernization
theory provides a suitable theoretical foundation for this study because
it focuses on technological progress and its influence on social change
(Nam, 2018). E-government initiatives and ICT spread represent
long-term technological progress, while changes in tax evasion represent
the social change caused by technological progress. Moreover, the
mitigation of tax evasion is a consequence of a series of advances and
changes in the technological and regulatory environments, reflecting the
results of fighting corruption in terms of institutional theory (Torgler,
2012; Alm et al., 2016; Alm et al., 2019). The results of this study prove
that the interplay between modernization theory and institutional the­
ory is significant for mitigating tax evasion. Second, this study is one of
the first to examine the impact of e-government on tax evasion at the
global level, as most previous studies focused on the effects of electronic
tax systems on tax compliance (Bhuasiri et al., 2016; Night and Bana­
nuka, 2019). Third, treating ICT adoption by society and citizens as a
moderator for the relationship between the digitalization of government
services and tax evasion is a novel approach. Using this moderating ef­
fect, the study aims to provide additional theoretical and empirical ev­
idence that e-government initiatives can more significantly affect tax
evasion in countries with better ICT infrastructure (Das et al., 2017) and
more ICT resources for citizens (Shareef et al., 2012). Fourth, we used a
comprehensive set of proxies to measure governments’ future orienta­
tions, their adaptability to changes and technological advances, and the
extent of e-government implementation. Therefore, our study is unique
in investigating tax evasion and suggesting a solution via technological
improvements with policy-making implications.
This study provides empirical evidence that governments’ future
orientation and adaptability to change play a significant role in reducing
tax evasion. Furthermore, governments’ long-term vision and imple­
mentation of technological changes are critical factors for achieving the
digital transformation of public services, which results in the decline of
tax evasion. Moreover, developing a legal framework for digital business
models reduces tax evasion by regulating the taxation of all digital
business transactions. In addition, the provision of online information
and services by governments to their citizens alleviates tax evasion.
Finally, moderation analysis shows that citizens’ ICT adoption positively
moderates the association between e-government practices and tax
evasion. Based on these findings, we suggest various theoretical and
practical implications as well as avenues for future research.
The rest of the paper is structured as follows: Section 2 explains the
theoretical framework and develops the hypotheses. Section 3 describes
the sample, data sources, and variables of the cross-national study.
Section 4 reports the results of the panel data analysis. Finally, Section 5
discusses the findings, offers conclusions, and suggests implications.
2. Theoretical framework and hypothesis development
2.1. Theoretical framework
Traditionally, the determinants and motivators of tax evasion have
been investigated using economic, utilization, and institutional theories
(Torgler, 2012; McGee et al., 2008; Yan and Oum, 2014; Tang et al.,
2014; Valle-Cruz et al., 2016; Alm et al., 2016; Alm et al., 2019; Alm and
A. Uyar et al.
Liu, 2017; Yamen et al., 2018). However, we examine the effects of
innovations in the public administration domain (i.e., e-government) on
tax evasion. Our theoretical framework is based mainly on two theories:
modernization theory and institutional theory. Modernization theory
focuses on macro-environmental factors, such as economic growth, po­
litical orientation, and technological progress, and their influence on
social change (Nam, 2018). According to Barker (2003), modernization
theory posits that modernized societies benefit more from emerging
technologies than less technologically structured societies. Given this
argument, as e-government is a practice associated with technological
advances, countries that enjoy better macro-environmental resources
(Norris, 2001; Singh et al., 2007; Nam, 2018), such as well-established
technological infrastructure, widespread ICT usage, and internet ac­
cess in daily life, could make better use of e-government services. Due to
technological improvements in government services leading to more
efficient government administration, social changes, such as a higher
level of tax compliance and a lower level of corruption, that may
eventually decrease the level of tax evasion are likely to occur.
Furthermore, we combine modernization theory with institutional
theory, according to which formal and informal institutions play a sig­
nificant role in driving social changes. While formal institutions include
codified regulations and laws, informal institutions include ethical
values, moral judgments, and culture (Kılıç et al., 2019). Prior research
adopted modernization theory while investigating the link between
e-government and corruption (Kock and Gaskins, 2014; Nam, 2018). In
this paper, we assume that tax evasion is affected by countries’ e-gov­
ernment initiatives to do with formal institutions, such as the legal
framework’s adaptability to the digital business model, and informal
institutions, such as ethical values and control of corruption. Given the
nature and structure of our research, the combination of modernization
and institutional theories allows us to show the impact of e-government
initiatives on tax evasion.
2.2. E-government and tax evasion
The impact of e-government on the tax evasion level of any country
can be investigated via two approaches: first, by analyzing the role that
digitalization plays in increasing the transparency and accountability of
public organizations. Within this context, Aggelidis and Chatzoglou
(2009) argued that e-government is an essential component in the
modernization of any government, functioning as a means to enhance
and support good governance, accountability, and transparency and
thus making the government more efficient and effective, which enables
citizens to use government services much more easily. Pérez-Morote
et al. (2020) have confirmed that the purpose of e-government is to
make public organizations more accountable and transparent. Besides,
several empirical studies have reported that e-government increases
transparency and accountability, which, in turn, increases government
efficiency (Rehman et al., 2016; Porumbescu, 2016, Srivastava et al.,
2016). However, other researchers have argued that increased efficiency
and transparency are not obvious consequences of the digitalization of
government services (Choi and Chandler, 2020) because, historically,
there have been many e-government initiatives that have not been
well-planned and implemented and have resulted in low performance or
failure (Dews, 2008; Anthopoulos et al., 2016). Consequently, the
digitalization of government services increases efficiency and effec­
tiveness if the implementation of e-government innovations is successful
and meets the expectations of citizens and organizations by ensuring
simplification and reducing complexity (Choi and Chandler, 2020).
Therefore, successful e-government initiatives result in increased
government transparency and accountability, leading to higher gov­
ernment efficiency. The role of higher government efficiency in fighting
corruption has been investigated by an enormous number of studies. In
this context, Nam (2018) has investigated the impact of e-government
service maturity on corruption control and has found that e-government
service maturity has a significant influence on controlling corruption,
3
Technological Forecasting & Social Change 166 (2021) 120597
with national culture moderating this association. Linhartová (2019) has
examined the relationship between a country’s corruption level and the
degree of e-government initiatives adopted in the country. The findings
of the study have shown that implementing e-government within public
services has a positive effect on a country’s corruption level (i.e., cor­
ruption decreases). Also, Adam (2020) has examined the influence of
e-government implementation on corruption in Africa using the medi­
ating effect of institutional quality and ICT development. The results
have confirmed ICT development’s effects on corruption levels and have
proven that institutional quality and ICT development play a significant
role as mediators between e-government practices and corruption.
These findings have supported the results of many earlier studies that
documented the positive effects of e-government on curtailing corrup­
tion (Iqbal and Seo, 2008; Shim and Eom, 2008; Kim et al., 2009;
Anderson, 2009; Mistry and Jalal, 2012; Ionescu, 2015; Porumbescu,
2016).
As the level of corruption declines due to the adoption of e-govern­
ment systems, the level of tax evasion is expected to decrease. In this
regard, scholars repeatedly emphasize that corruption is one of the main
driving factors in tax evasion (Baum et al., 2017), with Alm et al. (2016)
arguing that, although corruption and tax evasion are divergent, they
can easily become entangled and mutually reinforce each other. Also,
the results of a survey on business students clarified that corrupt gov­
ernment officials function as one of the strongest justifications for tax
evasion (McGee et al., 2008). Empirically, Ajaz and Ahmad (2010)
found a negative and significant effect of corruption on tax compliance.
Alm et al. (2016) have provided empirical evidence that the control of
corruption is a significant factor in decreasing tax evasion. In addition,
many other studies have reported similar results (Bejakovic, 2014;
Faridy et al., 2016; Ivanyna et al., 2016; Rosid et al., 2016; Marriot,
2017; Swanepoel and Meiring, 2017; Máchová et al., 2018) and
concluded that higher corruption leads to greater tax evasion and lower
tax revenues.
The second approach for investigating the relationship between e-
government and tax evasion focuses on the effects of e-tax systems and
tax regulations on tax compliance. Implementing an e-tax system as part
of e-government practices requires regulatory reforms that can make e-
tax system more flexible, simple, and efficient. According to an OECD1
(1997) report, regulatory reforms must focus on creating simpler and
more effective, flexible, and efficient regulations. Another OECD (2007)
report recommended some “best-practice” tools for better regulation,
with one of the recommendations stating that information technology is
an important tool for diminishing manual burdens via simplification of
procedures and data sharing. Therefore, using an e-tax system that in­
cludes e-filing and e-payment systems increases tax compliance. Sup­
porting this argument, Night and Bananuka (2019) examined the
mediating effect of e-tax system adoption on the association between
taxpayers’ attitudes toward the e-tax system and their tax compliance
based on evidence from small enterprises in Uganda. Analysis of the
questionnaires filled out by 214 managers of small enterprises has
shown that the adoption of the e-tax system and the attitude toward the
e-tax system are significantly related to tax compliance. Furthermore,
Bhuasiri et al. (2016) examined the determinants of taxpayers’ in­
tentions to use an e-tax filing and e-payment system in Thailand. Anal­
ysis of a large-scale survey that was distributed to Thai taxpayers
revealed that tax compliance increased due to the adoption of the e-tax
system as part of e-government implementation.
Given the aforementioned arguments regarding both approaches to
the relationship between e-government initiatives and tax evasion, we
propose the following hypothesis:
H1: Digitalization of government services (i.e., e-government ini­
tiatives) significantly reduces tax evasion.
1
Organisation for Economic Co-operation and Development.
A. Uyar et al.
2.3. ICT’s moderating influence
While digitalization of government services refers to the imple­
mentation of e-government initiatives, ICT adoption refers to the use of
ICTs by citizens and society when engaging these public services. ICT
refers to all communication devices and applications, such as mobile
phones, computers, laptops and tablets, television, software, or satellite
systems, that help users to access, transmit, and store information (Sabri
et al., 2012). The spread of ICTs requires proper technological infra­
structure, a reliable internet connection, and the dissemination of
knowledge regarding technology and IT usage among citizens. There­
fore, e-government initiatives are unlikely to be successful without
making ICTs widely available to citizens, which is why governments all
over the world have made substantial investments in ICT to bring online
public services for citizens (Rombach et Steffens, 2009). In this context,
Bélanger and Carter (2012) and Glyptis et al. (2020) have argued that
government agencies across the globe are heavily investing in ICTs,
which enables governments to provide information electronically. Some
governments have even taken steps to develop the concept of smart
cities, whereby digital services and e-government systems are imple­
mented in all aspects of life, requiring widespread coverage and use of
ICT tools, infrastructure, and knowledge (Ferraris et al., 2020).
Scholarship on ICTs mainly focuses on the effects of using informa­
tion technology and the impact of internet use on economic growth due
to cost reductions and improvements in operational efficiency and
effectiveness (Bounabat, 2017). Koutroumpis (2009) stressed that ICT
improves communication among firms and contributes to their profits
and to the overall economic growth of a country. Quah (2002) also
argued that ICT improves labor skills, technology-based education,
e-learning, and consumer sophistication. Within the public administra­
tion domain, Adam (2020) has examined the effect of e-government
development on corruption in Africa by incorporating institutional
quality and ICT development as mediators. The findings verified the
significant role that institutional quality and ICT development play as
mediators between e-government and corruption. Therefore, we pro­
pose that ICTs should play a positive moderating role between the
implementation of e-government initiatives and tax evasion. Based on
the above arguments, we propose the following hypothesis:
H2: ICTs moderate the association between e-government initiatives
and tax evasion; more specifically, the positive role of e-government in
mitigating tax evasion is stronger in countries where ICT adoption by
society and citizens is higher.
Fig. 1. The figure depicts the theoretical framework of the study. Constructs on the left are e-governance indicators, the construct on the right is tax evasion, and the
upper construct is the moderator (please see the section “3.1. Variables” for the definition of the variables).
4
Technological Forecasting & Social Change 166 (2021) 120597
Fig. 1 depicts the theoretical framework of our study and explains the
constructs of the study model.
3. Research methodology
Our methodology involved multiple analysis tools, including uni­
variate and multivariate approaches. Initially, the data was subjected to
data preprocessing steps, including missing value data analysis, multiple
imputation, outlier detection, and winsorization of extreme values.
Following the data screening phase, linear panel data regression analysis
was performed during the baseline analysis. Subsequently, moderation
analysis with the help of the threshold test was carried out. Finally, the
robustness check of the baseline model was tested using ordinary least
square (OLS) regression analysis.
The baseline research methodology included linear panel data
analysis with a time fixed effects estimator and moderation analysis with
threshold regression. Our sample was based on country-year level re­
cords. The country was the panel variable, and the year was the time
variable. The structure of the sample allowed us to use regression
analysis for panel data (Baltagi 2001; Wooldridge, 2010; Bouet and Roy,
2012; DeBacker et al., 2015). Furthermore, TaxEvasion as the dependent
variable and E-Participation, FutureOrient, GovAdaptability, GovResp­
Change, LegalFramework, and GovernVision as the independent test
variables indicated a time-variant relationship (please see the next
section for the definition of the variables). Hence, the time fixed effect
was used to investigate the link between e-government and tax evasion.
The fixed effect panel data regression analysis has various advantages: i)
minimizing the risks related to possible multicollinearity issues (Baltagi,
2001), ii) alleviating the biases in the estimation of the coefficients
related to the multicollinearity issues (Baltagi, 2001), iii) controlling
omitted variable bias (Baltagi, 2001; Wooldridge, 2010), and iv)
ensuring internal validity (Wooldridge, 2010, 2013). Further details of
the empirical methodology can be found in Section 3.3.
In the second phase of the empirical methodology, the moderating
effect of the ICTadoption was investigated by employing threshold
regression (Hansen, 1999). Threshold models have diverse applications
in econometrics, the majority of which include empirical sample split­
ting when the sample split is based on a continuous numerical moder­
ating variable (Hansen, 2000). In addition, threshold regression
methodology was previously adopted in various domains, such as
finance (Ng et al., 2015), economics (Chen and Lee, 2005; Hajamini and
Falahi, 2018), and tax evasion (Marakbi and Villieu, 2020). Sample
A. Uyar et al. Technological Forecasting & Social Change 166 (2021) 120597

splitting to generate sub-samples can be based on the median or the Table 1

average of a moderating variable. However, there is no strong theoret­ Definitions of variables.
ical support for why the sample is split based on the central tendency of a Variable Definition Source
moderating variable. In our study, the optimum threshold value to split
Dependent
the sample was determined by the threshold test developed by Hansen variable:
(1999). Hansen’s threshold test was further theoretically developed and TaxEvasion Tax evasion proxied by the size of the Medina and
enhanced in Hansen (2000). Further details of the moderation analysis shadow economy (% of GDP). Schneider (2019)
can be found in Section 4.4. Test variables:
E-Participation Score on the E-Participation Index, which WEF (2020)
assesses the use of online services to
3.1. Variables facilitate the provision of information by
governments to citizens. The scale ranges
The study used four sets of variables: dependent, test, moderating, from 0 to 100 (best).
FutureOrient Assesses the future orientation of a WEF (2020)
and control variables. The dependent variable was tax evasion (Tax­
government based on a scale ranging from
Evasion), proxied by the shadow economy as a percentage of the gross 0 to 100 (best).
domestic product (GDP) (Schneider and Medina, 2017; Medina and GovAdaptability Assesses a government’s adaptability to WEF (2020)
Schneider, 2019). The shadow economy was previously used by several change based on a scale ranging from 0 to
studies when measuring TaxEvasion (Khlif et al., 2016; Yamen et al., 100 (best).
GovRespChange Response to the survey question “In your WEF (2020)
2018). The test variables were retrieved from the Global Competitive­ country, to what extent does the
ness Index (GCI) issued by the World Economic Forum (WEF, 2020). For government respond effectively to change
test variables (i.e., variables of interest), we adopted the following six (e.g., technological changes, societal and
indicators from the GCI assessing governments’ long-term vision and the demographic trends, security and
economic challenges)?” based on a scale
digitalization of government services: e-participation, future orientation
from 0 to 100 (best).
(FutureOrient), government adoptability (GovAdaptability), a govern­ LegalFramework Response to the survey question “In your WEF (2020)
ment’s response to change (GovRespChange), legal framework for dig­ country, how fast is the legal framework
ital business models (LegalFramework), and a government’s long-term of your country adapting to digital
vision (GovernVision). For the moderation variable, ICT adoption business models (e.g., e-commerce,
sharing economy, fintech, etc.)?” based on
(ICTadoption) was also derived from the GCI, assessing the diffusion of a scale from 0 to 100 (best).
information and communication technologies within society. The set of GovernVision Response to the survey question “In your WEF (2020)
control variables was retrieved from the World Bank (2018). The de­ country, to what extent does the
scriptions of the variables included in our empirical model can be found government have a long-term vision in
place?” based on a scale from 0 to 100
in Table 1.
(best).
Moderation
3.2. Sample and data preprocessing variable:
ICTadoption Assesses the degree of diffusion of specific WEF (2020)
When selecting the study period, data availability was important. information and communication
technologies, ranging from 0 to 100
The e-government and ICT adoption data retrieved from the WEF (2020) (best).
were available starting from 2006, and the tax evasion data was avail­ Control variables:
able until 2017; therefore, we set the study period between 2006 and AgricVal Agriculture, value added (% of GDP) World Bank
2017. Before conducting further analysis, the data screening phase was (2018)
FDI Foreign direct investment, net inflows (% World Bank
handled as the critical phase before running the baseline analysis and
of GDP) (2018)
included missing data analysis, outlier detection, winsorization of LnGDPperCap GDP per capita (constant 2010 US$) World Bank
extreme values, and imputation of missing values. (Natural logarithm) (2018)
Initially, the descriptive statistics of the missing values analysis GovExp General government final consumption World Bank
showed that foreign direct investment (FDI) and Trade were heavily expenditure (% of GDP) (2018)
Inflation Inflation, consumer prices (annual %) World Bank
skewed, with significant standard deviations around the mean values. (2018)
Therefore, these two control variables were subjected to the winsori­ LnPopulation Population, total (Natural logarithm) World Bank
zation process by winsorizing them in both the lower and top tails at 1% (2018)
and replacing extreme values with their winsorized/trimmed counter­ PrimEduc Primary education, duration (years) World Bank
(2018)
parts in both tails.
Trade Trade (% of GDP) World Bank
Furthermore, possible outliers were investigated using the multi­ (2018)
variate outlier detection methodology with the minimum covariance UrbPop Urban population (% of total) World Bank
determinant (MCD) estimator to robustify the Mahalanobis distance (2018)
(Verardi and Dehon, 2010). The initial sample included 1692
country-year records between 2006 and 2017 for 12 years. Accordingly,
considered inconsequential (Schafer, 1999). Furthermore, missing
the results showed that 15 country-year observations were detected as
values of more than 10% are likely to generate biased results in statis­
possible outliers. Therefore, these 15 records were removed from the
tical analysis (Bennett, 2001). Even though the missing values in our
sample, yielding a sample of 1677 country-year records for further
sample likely did not produce any biased results and were inconse­
analysis.
quential, multiple imputation with the Markov chain Monte Carlo
Then, missing data analysis and imputation steps were performed.
(MCMC) method using linear regression as the model type for scale
The initial summary statistics indicated that some variables of interest
variables was performed in the final step of data preprocessing.
had missing values. Namely, TaxEvasion had 72 (4.26%), LegalFrame­
The distribution of the final sample based on the years indicated that
work had 48 (2.84%), GovernVision, Population, UrbPop, and PrimEduc
there were 140 country-year observations in 2006, 2008, 2009, 2010,
had 12 (0.71%), AgricVal had 34 (2.01%), FDI had 17 (1.00%),
2011, 2012, 2013, 2014, and 2015 and 139 observations in 2007, 2016,
GDPperCap had 15 (0.89%), GovExp had 55 (3.25%), Inflation had 44
and 2017, yielding a total of 1677 country-year records.
(2.60%), and Trade had 46 (2.72%) country-year missing observations.
The distribution of the missing values was less than 5%, which is

5
A. Uyar et al. Technological Forecasting & Social Change 166 (2021) 120597

3.3. Empirical methodology Table 2

Descriptive statistics.
This section describes the formulation of the models and justifies the Variable Obs Mean SD Min Max
selection of the empirical methodology. Linear panel data regression
TaxEvasion 1677 27.50 11.83 5.13 63.33
analysis was chosen as the most appropriate analytic tool to investigate E-Participation 1677 66.29 24.83 7.87 100.00
the proposed models because the structure of the sample used a country- FutureOrient 1677 54.05 12.44 20.82 81.34
year longitudinal data format and the time-variant relationship aspect of GovAdaptability 1677 46.72 14.52 8.58 85.52
the independent variables and the dependent variable. According to GovRespChange 1677 45.11 14.73 7.20 85.22
LegalFramework 1677 44.61 13.43 14.71 78.03
Baltagi (2001), panel data regression analysis decreases the risk of GovernVision 1677 47.22 16.75 6.64 91.20
multicollinearity and biases in the estimations process. Further tests, AgricVal 1677 9.77 9.77 0.03 55.77
such as the F-test, the Breusch–Pagan Lagrange Multiplier (LM) test, and FDI 1677 5.63 8.87 − 4.85 58.52
Hausman’s test were used to determine whether linear panel regression LnGDPperCap 1677 8.73 1.49 5.37 11.63
GovExp 1677 15.81 5.27 2.05 41.89
with fixed-effects, random-effects, or pooled OLS should be performed.
Inflation 1677 5.25 8.85 − 60.50 254.95
The F-test results showed that fixed effect panel regression analysis was LnPopulation 1677 16.21 1.59 11.35 20.99
the most appropriate approach compared to ordinary pooled OLS PrimEduc 1677 60.20 22.37 9.62 100.00
regression analysis. The LM test revealed that panel data analysis with Trade 1677 5.69 0.86 3.00 8.00
random effects was the more appropriate compared to the ordinary OLS UrbPop 1677 91.41 55.90 25.85 371.75
ICTadoption 1677 55.18 19.28 10.77 92.84
regression analysis. The results of Hausman’s test (Hausman, 1978)
indicated that panel data analysis with fixed effects was more appro­
priate compared to random effects. The results of these tests showed that 4.2. Correlation analysis
linear panel data regression analysis with fixed effects was the most
appropriate analytical approach to test the proposed hypotheses. The bivariate correlation coefficients can be found in Table 3. The
The functional relationship in Eq. (1) represents the proposed results of Pearson’s correlation analysis showed that E-Participation (r
research models with time fixed effects because the independent test = − 52.5%, p < 0.05), FutureOrient (r = − 65.5%, p < 0.05), GovA­
variables are constant across countries while varying over year (Time). daptability (r = − 49.1%, p < 0.05), GovRespChange (r = − 46.9%, p <
This proposed model eliminates the omitted variable bias due to the 0.05), LegalFramework (r = − 56.6%, p < 0.05), and GovernVision (r =
exclusion of unobserved variables that evolve over year but are constant − 32.1%, p < 0.05) had a significant negative bivariate association with
across countries (Baltagi, 2001; Wooldridge, 2010, 2013). The func­ TaxEvasion.
tional relationship was represented as follows: The risk of multicollinearity was investigated using variance infla­
yit = α + βXit + δ2 B2t + ⋯ + δT BTt + ∈it (1) tion factors (VIFs). Due to the significantly high correlation between the
independent test variables, they were included separately rather than
In Eq. (1), T: 2, 3, …, t (T− 1) dummy time variables are included, and simultaneously in the analysis, as suggested by prior studies with similar
B1 is omitted because the model already included an intercept (α). The cases (Pradhan et al., 2014; de Villiers and Marques, 2016). Further­
dependent variable represented by the term in “yit ” was TaxEvasion. The more, the VIFs of the proposed models ranged between 1.03 and 6.96,
term “Xit ” indicated the independent test and the control variables: the which was significantly less than the recommended critical value of 10
independent test variables were E-Participation, FutureOrient, GovA­ for the consideration of multicollinearity (Hair et al., 2010; de Villiers
daptability, GovRespChange, LegalFramework, and GovernVision, and Marques, 2016), indicating no risk of multicollinearity.
whereas the control variables were AgricVal, FDI, GDPperCap, GovExp,
Inflation, Population, PrimEduc, Trade, and UrbPop. To eliminate the
4.3. Linear panel data regression analysis
risk of multicollinearity, the independent test variables were included in
the proposed models separately instead of simultaneously because they
The baseline analysis to test the hypotheses was based on linear
had a significantly high correlation among them (please see Section 4.2.
panel data regression analysis with time fixed effects. The association of
for regarding the multicollinearity issue). Moreover, the index “i” rep­
the independent test variables (E-Participation, FutureOrient, GovA­
resented the country as the panel variable, while the index “t” repre­
daptability, GovRespChange, LegalFramework, and GovernVision) with
sented the year as the time variable. Finally, the term “ϵit ” indicated the
the dependent variable (TaxEvasion) can be found in Table 4. The results
regular error term. The heteroscedasticity-consistent robust standard
indicated that E-Participation (β = − 0.012, p < 0.05), FutureOrient (β =
errors using Eicker–Huber–White standard errors estimator (Eicker,
− 0.23, p < 0.01), GovAdaptability (β = − 0.15, p < 0.01), GovResp­
1967; Huber, 1967; White, 1980) in the idiosyncratic error term “ϵit ” to
Change (β = − 0.15, p < 0.01), LegalFramework (β = − 0.17, p < 0.01),
alleviate the risk of heteroskedasticity issue were chosen when per­
and GovernVision (β = − 0.082, p < 0.01) had a significant negative
forming the further regression analysis of the proposed models.
relationship with TaxEvasion. The results support H1 regarding the as­
sociation between e-government practices and tax evasion.
4. Findings

4.1. Descriptive statistics 4.4. Moderating (threshold) analysis

The summary statistics based on the final sample of 1677 country-
year observations of the included variables can be found in Table 2.
The results showed that mean TaxEvasion was 27.50% ± 11.83%, with
relatively small variability around the mean. Mean E-Participation was
66.29 ± 24.83, FutureOrient was 54.05 ± 12.44, GovAdaptability was
46.72 ± 14.52, GovRespChange was 45.11 ± 14.73, LegalFramework
was 44.61 ± 13.43, GovernVision was 47.22 ± 16.75, and ICTadoption
was 55.18 ± 19.28, with relatively small or less-than-moderate variation
around mean values.
To test the moderating effect of “ICTadoption” on the association
between the independent test variables and TaxEvasion, the threshold
estimates of the countries’ ICTadoption were calculated using the single-
threshold model developed by Hansen (1999). In the suggested
threshold models, the overall sample was split into two sub-samples
based on the obtained significant threshold estimates. The
single-threshold model was formulated in Eq. (2):
yit = μ + Xit (qit ≤ γ)β1 + Xit (qit > γ)β2 + ui + eit (2)
The dependent variable (yit) was TaxEvasion, while the independent
variables (Xit) included the test variables of e-government initiatives (E-

6
A. Uyar et al. Technological Forecasting & Social Change 166 (2021) 120597

Table 3
Pearson correlation coefficients.
Variables V1 V2 V3 V4 V5 V6 V7 V8 V9

(1) TaxEvasion 1
(2) E-Participation − 0.525* 1
(3) FutureOrient − 0.655* 0.638* 1
(4) GovAdaptability − 0.491* 0.420* 0.788* 1
(5) GovRespChange − 0.469* 0.383* 0.737* 0.976* 1
(6) LegalFramework − 0.566* 0.580* 0.827* 0.871* 0.835* 1
(7) GovernVision − 0.321* 0.209* 0.650* 0.937* 0.922* 0.712* 1
(8) AgricVal 0.526* − 0.548* − 0.533* − 0.268* − 0.216* − 0.375* − 0.129* 1
(9) FDI − 0.145* 0.128* 0.217* 0.202* 0.183* 0.185* 0.148* − 0.144* 1
(10) LnGDPperCap − 0.704* 0.686* 0.701* 0.445* 0.387* 0.562* 0.260* − 0.836* 0.182*
(11) GovExp − 0.369* 0.179* 0.271* 0.105* 0.087* 0.178* 0.032 − 0.437* 0.045
(12) Inflation 0.175* − 0.181* − 0.250* − 0.188* − 0.170* − 0.208* − 0.129* 0.186* − 0.027
(13) LnPopulation 0.068* 0.138* − 0.077* − 0.114* − 0.066* − 0.03 − 0.116* 0.225* − 0.293*
(14) UrbPop − 0.513* 0.551* 0.474* 0.301* 0.267* 0.435* 0.135* − 0.745* 0.171*
(15) PrimEduc − 0.012 − 0.168* 0.007 0.093* 0.039 − 0.019 0.130* 0.034 0.049*
(16) Trade − 0.301* 0.158* 0.345* 0.338* 0.322* 0.315* 0.284* − 0.309* 0.547*
(17) ICTadoption − 0.621* 0.722* 0.730* 0.491* 0.443* 0.633* 0.309* − 0.740* 0.182*
Variables V10 V11 V12 V13 V14 V15 V16 V17 .
(10) LnGDPperCap 1 .
(11) GovExp 0.400* 1 .
(12) Inflation − 0.214* − 0.131* 1 .
(13) LnPopulation − 0.212* − 0.294* 0.114* 1 .
(14) UrbPop 0.814* 0.272* − 0.151* − 0.125* 1 .
(15) PrimEduc 0.008 0.078* − 0.018 − 0.114* 0 1 .
(16) Trade 0.328* 0.101* − 0.091* − 0.454* 0.269* 0.015 1 .
(17) ICTadoption 0.872* 0.319* − 0.212* − 0.214* 0.713* − 0.134* 0.387* 1 .

*p < 0.05.

Table 4.
Time fixed effect linear panel data regression analysis.
(1) (2) (3) (4) (5) (6)
Independent variables TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion

E-Participation − 0.012**
(− 1.97)
FutureOrient − 0.23***
(− 10.11)
GovAdaptability − 0.15***
(− 9.73)
GovRespChange − 0.15***
(− 10.24)
LegalFramework − 0.17***
(− 9.31)
GovernVision − 0.082***
(− 6.60)
AgricVal − 0.28*** − 0.24*** − 0.21*** − 0.20*** − 0.20*** − 0.25***
(− 7.33) (− 6.60) (− 5.60) (− 5.34) (− 5.40) (− 6.49)
FDI 0.025 0.040 0.027 0.024 0.027 0.020
(0.96) (1.58) (1.05) (0.94) (1.06) (0.76)
LnGDPperCap − 7.07*** − 5.37*** − 6.15*** − 6.24*** − 6.06*** − 6.72***
(− 21.71) (− 16.27) (− 20.80) (− 21.53) (− 20.08) (− 23.27)
GovExp − 0.40*** − 0.38*** − 0.41*** − 0.40*** − 0.38*** − 0.41***
(− 9.29) (− 9.05) (− 9.90) (− 9.64) (− 9.11) (− 9.77)
Inflation 0.036 0.0017 0.014 0.014 0.011 0.027
(1.59) (0.08) (0.61) (0.63) (0.51) (1.20)
LnPopulation − 1.35*** − 1.07*** − 1.29*** − 1.23*** − 1.14*** − 1.38***
(− 8.76) (− 7.45) (− 9.27) (− 8.81) (− 8.02) (− 9.76)
PrimEduc − 0.075 − 0.00020 0.18 0.055 − 0.086 0.17
(− 0.32) (− 0.00) (0.83) (0.25) (− 0.39) (0.76)
Trade − 0.038*** − 0.029*** − 0.029*** − 0.027*** − 0.029*** − 0.032***
(− 8.33) (− 6.32) (− 6.25) (− 5.93) (− 6.35) (− 6.93)
UrbPop 0.068*** 0.033** 0.056*** 0.060*** 0.067*** 0.057***
(4.44) (2.16) (3.74) (4.05) (4.51) (3.77)
Constant 121.4*** 114.0*** 116.7*** 116.3*** 114.3*** 120.5***
(30.22) (29.94) (30.98) (30.96) (29.85) (31.82)
Time effect Yes Yes Yes Yes Yes Yes
N 1677 1677 1677 1677 1677 1677
Adj-R2 0.57 0.59 0.59 0.59 0.59 0.58
F-statistics 103.01*** 114.13*** 113.30*** 114.43*** 112.43*** 107.69***

Note. The t statistics are in parentheses.

*
p < 0.10. **p < 0.05. ***p < 0.01.

7
A. Uyar et al.
Participation, FutureOrient, GovAdaptability, GovRespChange, Legal­
Framework, and GovernVision) and the control variables. In addition,
the threshold variable (qit) was “ICTadoption”, γ was the threshold
parameter that divided the equation into two regimes (sub-samples)
with coefficients β1 and β2, while ui and eit were the individual effect and
the disturbance, respectively. In addition, i represented the country and t
represented the time period (year). The model represented the role of e-
government as differing if the level of ICTadoption was below or equal
to, or above the unknown threshold level of γ. The β1 and β2 coefficients
captured the effects of e-government on TaxEvasion for, respectively,
countries with ICTadoption below or equal to γ and countries with
ICTadoption above γ.
The threshold estimates were calculated for each dimension of e-
government. Then, the threshold values, the LM test for no threshold
(the null hypothesis of LM test was no threshold effect), and the boot­
strap p value were provided in Table 5, together with the panel regres­
sion analysis with fixed effects for each regime (Regime 1 and Regime
2). The results of the LM test indicated that no threshold effect was
rejected in favor of the threshold effect for each model. Furthermore,
Regime 1 (Low) represented the regression analysis with the sub-sample
where ICTadoption was less than or equal to the estimated threshold
value, while Regime 2 (High) represented the regression analysis with
the sub-sample where ICTadoption was greater than the estimated
threshold value. Also, when calculating the threshold estimates, the
number of bootstrap replications was set as 5000 and the trimming
percentage was set at 0.15. Following the threshold analysis to estimate
the threshold values, each model was subjected to a similar fixed effects
linear panel data regression analysis.
The results of the moderating effect of ICTadoption on the associa­
tion of E-Participation, FutureOrient, GovAdaptability, GovRespChange,
LegalFramework, and GovernVision with TaxEvasion can be found in
Table 5, together with the estimated threshold values. The results
showed that the coefficients of E-Participation, FutureOrient, GovA­
daptability, GovRespChange, LegalFramework, and GovernVision were
significantly negative for both regimes: when ICTadoption was less than
or equal to the estimated threshold values (Regime 1) and when ICTa­
doption was greater than the estimated threshold values (Regime 2).
However, the impact of the independent test variables increased from
the Low (ICTadoption ≤ estimated threshold value) to the High (ICTa­
doption > estimated threshold value) Regime based on the reported t-
statistics values in the parenthesis. Therefore, the findings confirmed the
positive moderating role of ICTadoption on the association between e-
government practices and tax evasion, implying that the positive role of
e-government in mitigating tax evasion was stronger in countries where
ICT adoption by society and citizens was high compared to the countries
where ICT adoption by society and citizens was low. Thus, H2 was
supported.
4.5. Robustness check
The robustness of the baseline analysis was checked by using OLS
regression analysis. The results can be found in Table 6. According to the
results, E-Participation, FutureOrient, GovAdaptability, GovResp­
Change, LegalFramework, and GovernVision had a significant negative
association with TaxEvasion, confirming the baseline analysis results
reported earlier in Table 4.
5. Discussion and conclusion
5.1. Discussion
With tax evasion being one of the problems that undermine the
economic and social development of countries, scholars have attempted
to understand why individuals and corporations attempt to evade taxes
and how this issue could be resolved. Digitalization, which touches
every aspect of life, affects the way that government organizations
8
Technological Forecasting & Social Change 166 (2021) 120597
deliver services to the public. Over the last decade, many cumbersome
manual transactions in public administration have been transformed by
digital means, such as e-government and e-filing practices. However,
such digital means can only be successfully implemented if countries
have robust and well-developed ICT infrastructures and if citizens have
access to ICTs. Therefore, this study has focused on the role of the
digitalization of government services in alleviating tax evasion via the
moderation effect of ICT. Using empirical evidence, the study has
attempted to provide public administrators and tax authorities with
insights regarding digitalization’s effects on mitigating tax evasion.
The results suggest the following conclusions: first, the future
orientation of a government plays a significant role in reducing tax
evasion, possibly because future orientation or perspective may be a
driving force behind technological applications in government services.
Second, government adaptability to change assesses the readiness or
willingness of the public authorities to adopt online solutions in service
delivery. Eventually, such technological change reduces tax evasion by
triggering the necessary means in e-government to enable e-applica­
tions, including the e-filing of tax returns. Third, the generic indicators
“future orientation” and “government adaptability to change” may
stimulate the transformation of public services, as indicated by the
additional four individual indicators. Therefore, governments’ long-
term vision is critical to achieving the digital transformation of public
services, which results in lower tax evasion. Fourth, regarding the
realization of long-term vision, governments’ absorption of and
response to technological changes may effectively facilitate the imple­
mentation of digital processes. Fifth, regarding the digital trans­
formation, developing a legal framework for digital business models
may reduce tax evasion because the legal framework regulates the
taxation of all digital transactions, such as online banking, e-commerce,
investing in the securities market, and the like. Finally, the provision of
online information and services by the government to its citizens alle­
viates tax evasion because the public can, consequently, receive timely
information, file tax returns, and pay taxes in a timely and efficient
manner. Our results have been further verified by the robustness test.
Moreover, moderation analysis has shown that the association between
e-government applications and tax evasion is positively moderated by
society and citizens’ ICT adoption, which is enabled by remote access to
online government services, internet infrastructure, and citizens’
internet access via computers, smartphones, and other devices. Moder­
ation analysis has also revealed that the explanatory power of the
research models in a high ICT environment is much greater than in a low
ICT environment.
Regarding service providers, our results have highlighted that
internet technologies can increase the efficiency of public services
(Singh et al., 2004) through a wide range of digital opportunities in
service delivery (Adam, 2020). More specifically, the link between
e-government and tax evasion, also confirmed by our study, indicates
that the digital transformation of public services may improve the
transparency and credibility of public administration and prevent cor­
ruption (Zhang and Zhang, 2009). Evidence shows that increasing the
efficiency and effectiveness of government procedures leads to lower
corruption in the bureaucracy (Park and Kim, 2020; Suhendi et al.,
2020) and, consequently, to lower levels of tax evasion. Regarding the
users, the digitalization of government services, including tax proced­
ures, may simplify and facilitate tax filing and payment, potentially
enhancing the level of tax compliance (Night and Bananuka, 2019). Our
study has demonstrated that innovation in government services is
worthwhile and results in a social change by yielding higher tax
compliance. Thus, by incorporating several relevant proxies of digital
transformation in government and of ICT adoption by society and citi­
zens, our study strengthens the existing literature on the adoption of
e-tax systems for improving tax compliance (Bhuasiri et al., 2016; Night
and Bananuka, 2019).
 A. Uyar et al.
Table 5
The moderating effect of ICT adoption by society and citizens.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion
Independent Low High Low High Low High Low High Low High Low High
variables ICT <= 53.45 ICT > 53.45 ICT <= 48.16 ICT > 48.16 ICT <= 50.05 ICT > 50.05 ICT <= 49.78 ICT > 49.78 ICT <= 44.95 ICT > 44.95 ICT <= 56.85 ICT > 56.85

E-Participation − 0.0037* − 0.013**

(− 1.67) (− 2.55)
FutureOrient − 0.21*** − 0.26***
(− 6.81) (− 7.24)
GovAdaptability − 0.12*** − 0.11***
(− 4.79) (− 5.01)
GovRespChange − 0.12*** − 0.11***
(− 4.93) (− 5.70)
LegalFramework − 0.13*** − 0.10***
(− 3.90) (− 4.50)
GovernVision − 0.059*** − 0.058***
(− 2.94) (− 3.38)
AgricVal − 0.072 − 0.30*** − 0.095** − 0.11 − 0.084* − 0.13 − 0.080* − 0.13 0.035 − 0.21*** − 0.10** − 0.31***
(− 1.40) (− 3.46) (− 2.05) (− 1.48) (− 1.85) (− 1.59) (− 1.74) (− 1.51) (0.75) (− 2.78) (− 1.98) (− 3.00)
FDI − 0.31*** 0.093*** − 0.22*** 0.089*** − 0.23*** 0.078*** − 0.23*** 0.074*** − 0.13* 0.060** − 0.20*** 0.071***
(− 4.14) (3.71) (− 3.19) (3.42) (− 3.48) (2.89) (− 3.37) (2.77) (− 1.67) (2.28) (− 2.69) (2.92)
LnGDPperCap − 4.36*** − 8.38*** − 2.55*** − 6.27*** − 3.83*** − 7.33*** − 3.88*** − 7.40*** − 0.73 − 7.18*** − 3.92*** − 8.28***
(− 6.82) (− 16.67) (− 4.09) (− 12.87) (− 6.46) (− 15.52) (− 6.49) (− 16.49) (− 1.05) (− 17.00) (− 6.37) (− 15.79)
9

GovExp − 0.30*** − 0.22*** − 0.31*** − 0.21*** − 0.41*** − 0.27*** − 0.40*** − 0.25*** − 0.21** − 0.28*** − 0.44*** − 0.20***
(− 4.25) (− 3.72) (− 4.23) (− 3.64) (− 5.94) (− 4.43) (− 5.59) (− 4.23) (− 2.57) (− 5.17) (− 6.49) (− 3.33)
Inflation 0.0048 0.22*** − 0.024 0.010 − 0.0056 0.058 − 0.0053 0.064 0.036 0.028 0.0037 0.22***
(0.19) (2.82) (− 1.02) (0.17) (− 0.25) (0.91) (− 0.23) (1.01) (0.67) (1.16) (0.14) (2.81)
LnPopulation − 1.19*** − 1.09*** − 0.31 − 1.08*** − 0.80*** − 1.36*** − 0.81*** − 1.30*** − 0.78*** − 1.03*** − 1.53*** − 0.98***
(− 4.04) (− 6.10) (− 1.12) (− 6.67) (− 3.05) (− 8.26) (− 3.04) (− 7.93) (− 2.70) (− 6.44) (− 5.77) (− 6.17)
PrimEduc 1.64*** − 0.037 3.41*** − 0.12 3.15*** − 0.17 2.95*** − 0.20 2.49*** − 0.28 0.77* 0.46
(3.91) (− 0.13) (6.91) (− 0.47) (6.68) (− 0.60) (5.97) (− 0.72) (4.67) (− 1.11) (1.91) (1.61)
Trade − 0.043*** − 0.036*** − 0.062*** − 0.025*** − 0.047*** − 0.030*** − 0.051*** − 0.028*** − 0.057*** − 0.031*** − 0.023 − 0.029***
(− 2.65) (− 7.81) (− 3.70) (− 5.20) (− 2.92) (− 6.06) (− 3.06) (− 5.66) (− 3.14) (− 6.33) (− 1.50) (− 6.32)
UrbPop 0.11*** 0.039** 0.058** 0.023 0.066** 0.057*** 0.067** 0.061*** 0.16*** 0.045** 0.038 0.054***

Technological Forecasting & Social Change 166 (2021) 120597

(4.36) (2.02) (2.23) (1.25) (2.58) (2.98) (2.54) (3.19) (5.51) (2.52) (1.48) (2.89)
Constant 84.0*** 127.2*** 59.0*** 121.2*** 72.8*** 125.3*** 74.5*** 124.5*** 47.7*** 120.5*** 97.4*** 121.6***
(9.78) (23.53) (7.20) (24.27) (9.21) (24.19) (9.28) (24.39) (5.19) (25.06) (11.82) (21.69)
Time effect Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Threshold estimate 53.45 48.16 50.05 49.78 44.95 56.85
Threshold estimate 193.92 172.61 183.65 175.85 153.36 198.80
LM-test for no threshold 0.001 0.001 0.001 0.001 0.001 0.001
N 802 875 610 1067 658 1019 646 1031 490 1187 850 827
Adj-R2 0.19 0.60 0.29 0.60 0.26 0.58 0.26 0.58 0.26 0.56 0.17 0.58
F-statistics 8.65*** 60.32*** 11.19*** 74.35*** 10.84*** 64.71*** 10.35*** 66.59*** 7.97*** 70.41*** 8.11*** 51.98***

Note. The t statistics are in parentheses. ICT: ICTadoption. In threshold estimates, the number of bootstrap replications was set at 5000 and the trimming percentage was set at 0.15. The null hypothesis of the LM test was no
threshold effect.
*
p < 0.10. **p < 0.05. ***p < 0.01.
A. Uyar et al. Technological Forecasting & Social Change 166 (2021) 120597

Table 6
Ordinary least square regression analysis.
(1) (2) (3) (4) (5) (6)
Independent variables TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion TaxEvasion

E-Participation − 0.011**
(− 2.13)
FutureOrient − 0.23***
(− 10.00)
GovAdaptability − 0.15***
(− 9.64)
GovRespChange − 0.15***
(− 10.15)
LegalFramework − 0.17***
(− 9.22)
GovernVision − 0.081***
(− 6.53)
AgricVal − 0.28*** − 0.25*** − 0.21*** − 0.20*** − 0.21*** − 0.25***
(− 7.35) (− 6.64) (− 5.64) (− 5.38) (− 5.45) (− 6.52)
FDI 0.029 0.045* 0.031 0.028 0.032 0.024
(1.11) (1.78) (1.23) (1.12) (1.26) (0.92)
LnGDPperCap − 7.09*** − 5.39*** − 6.17*** − 6.26*** − 6.08*** − 6.73***
(− 21.75) (− 16.33) (− 20.83) (− 21.56) (− 20.11) (− 23.30)
GovExp − 0.40*** − 0.38*** − 0.41*** − 0.40*** − 0.38*** − 0.41***
(− 9.31) (− 9.10) (− 9.93) (− 9.67) (− 9.16) (− 9.79)
Inflation 0.032 − 0.00061 0.010 0.011 0.0085 0.023
(1.44) (− 0.03) (0.47) (0.49) (0.39) (1.04)
LnPopulation − 1.37*** − 1.09*** − 1.31*** − 1.25*** − 1.16*** − 1.40***
(− 8.88) (− 7.60) (− 9.39) (− 8.94) (− 8.16) (− 9.87)
PrimEduc − 0.089 − 0.019 0.16 0.037 − 0.10 0.15
(− 0.38) (− 0.09) (0.74) (0.17) (− 0.47) (0.67)
Trade − 0.039*** − 0.030*** − 0.030*** − 0.029*** − 0.030*** − 0.033***
(− 8.61) (− 6.64) (− 6.55) (− 6.24) (− 6.65) (− 7.22)
UrbPop 0.068*** 0.033** 0.056*** 0.060*** 0.067*** 0.057***
(4.44) (2.15) (3.74) (4.04) (4.49) (3.77)
Constant 121.0*** 113.6*** 116.3*** 116.0*** 114.0*** 120.1***
(30.32) (30.01) (31.07) (31.05) (29.93) (31.93)
N 1677 1677 1677 1677 1677 1677
Adj-R2 0.56 0.59 0.59 0.59 0.58 0.57
F-statistics 214.19*** 236.83*** 235.22*** 237.53*** 233.40*** 223.72***

Note. The t statistics are parentheses.

*
p < 0.10. **p < 0.05. ***p < 0.01.

5.2. Theoretical implications
The results suggest several theoretical and practical implications for
policymakers. In terms of theoretical contribution, the study proves that
modernization and institutional theories are well-suited for explaining
why ICT use in government services results in lower tax evasion. In line
with modernization theory, countries with long-term vision and exten­
sive use of e-government services benefit more from investing in ICT in
terms of curbing tax evasion (Nam, 2018). Therefore, the findings
confirm modernization theory’s postulate that modernized societies
gain more from cutting-edge technologies than traditional societies
(Barker, 2003). As the moderation effect shows, society and citizens’
alignment with ICT adoption facilitates social change (i.e., decreasing
tax evasion). This study extends prior research based on modernization
theory that investigates the link between e-government and corruption
(Kock and Gaskins, 2014; Nam, 2018). According to institutional theory,
institutions are mechanisms that guide human actions and behaviors in
society via social norms, culture, and regulations (Luna-Reyes and
Gil-Garcia, 2011). In accordance with institutional theory (Kılıç et al.,
2019), the legal framework and regulatory arrangements for e-govern­
ment services are also likely to enhance the efficiency of governance and
to augment tax compliance, as such legal and regulatory means specify
the parameters of online service provision and use for individuals and
enterprises.
5.3. Practical implications
In terms of practical implications, the findings suggest that govern­
ments’ long-term vision, future orientation, and readiness to change are
important drivers of e-government initiatives. These drivers are the
prerequisites of the technological and digital revolution in public ser­
vices, including the taxation system. Bolgherini (2007) stated the
importance of a long-term vision for the successful implementation of
e-government initiatives, in addition to technical know-how and com­
petences. Therefore, our findings imply that change begins with the
mentality of the administrators and their affinity to digital applications.
Furthermore, governments’ responsiveness to change can be fostered by
procuring cutting-edge technological devices and installing the neces­
sary software packages, which are the prerequisites for further digita­
lization and maintenance of government services. During the
digitalization process, the public sector can benefit from the expertise
and experience of private enterprises, which may expedite and simplify
the transformation process. Recent articles have drawn attention to
public-private cooperation in stimulating innovation in the public
domain (Ferraris et al., 2020). Moreover, the legal framework is
important for detailing the implementation process of digitalization,
setting up the specifications and security of the taxation system as well
as the enforcement mechanism in case of abuses and piracy. Sound de­
scriptions of the online taxation system’s legal parameters make tax
filing easier for companies and individuals by eliminating confusion and
complexity. Scholars consider the simplification and reduction of
complexity to be necessary elements in successfully applying in­
novations to the public domain (Choi and Chandler, 2020). It is also
imperative to ensure the security of taxpayers’ transactions by estab­
lishing a strong legal framework and installing firewalls to make sure
that online platforms are trustworthy and risk-free, as security is a sig­
nificant concern for the taxpayers using e-filing tax systems (Schaupp
et al., 2010; Maphumula and Njenga, 2019). Also, the legal framework

10
A. Uyar et al.
should clarify and set the bounds for protecting taxpayers’ private in­
formation (Davis, 2005). As a final stage of digitalization, direct provi­
sion of information and government services to the public enables
citizens to continuously receive the most up-to-date information and file
their tax returns on time. This also enables the tax authorities to assess
tax filings in real time, allowing the effective allocation of funds.
Moreover, moderation analysis has suggested that government au­
thorities should establish a robust and well-designed ICT infrastructure
because the latter strengthens e-government applications. Although this
requires substantial hardware and software investments as well as
skilled human resources, upgrading the ICT infrastructure is worthwhile
due to reduced tax evasion and improved tax revenue. The outcome of
the moderation analysis has confirmed the results of prior studies, which
showed that e-government services are more efficient in countries with
better ICT infrastructure (Das et al., 2017). Shareef et al. (2012) stated
that the availability of ICT resources to the citizens and citizens’ com­
puter abilities should be a priority for successful e-government imple­
mentation, especially in developing countries.
Overall, our findings offer global evidence regarding the role of e-
government practices in mitigating tax evasion, something that prior
studies have posited without verifying empirically (Lee et al., 2008). The
six highlighted dimensions of the digital transformation of government
services as described in this study can serve as guidelines to the countries
that aim to implement e-government practices, seeing that such a
transformation is not risk-free (Choi and Chandler, 2020). Therefore,
our study fills an important research gap and extends existing scholar­
ship by bringing a multi-dimensional perspective to measuring e-gov­
ernment implementations and adding a third dimension, the moderating
effect, to the study model. As tax evasion is a barrier to social and
economic development, studying tax evasion is important for countries
and policymakers as well as citizens, to whom the public services are
provided, to make sure that the taxation system is efficient. Globally, the
magnitude of tax evasion (proxied by the shadow economy) is, on
average, 28.23% (relative to GDP), rising to 69.08% in some countries,
as shown in the descriptive statistics. This shows the severity of tax
evasion, which requires more research to find solutions. Future studies
could adopt our approach and develop multi-perspective research ap­
proaches to investigate innovations in the public domain that can help
solve social issues. We suggest specific potential research avenues in the
following sub-section.
5.4. Limitations and future research avenues
The primary limitation of this study was the timeframe of the sample,
set between 2006 and 2017 due to the data availability of that period.
There are several avenues for future research. A study focusing on a
particular set of countries, such as developing or in-transition countries,
could reveal interesting findings, as the ICT infrastructure and devel­
opment of e-government services of such countries tend to be different
than those of developed countries. Such a study could be particularly
useful for developing or in-transition countries. Our study is a cross-
country work based on the shadow-economy data as the tax-evasion
proxy. A further study could test how the digitalization of government
services affects the tax-evasion tendencies of corporations. Moreover,
regarding the association between e-government applications and tax
evasion, scholars could examine other potential moderators, such as
education quality, culture, and corruption. It could also be interesting to
investigate how social capital moderates the relationship between e-
government practices and tax evasion. Finally, if data allows, scholars
could study whether the digital transformation of government services
results in efficiency and cost savings in terms of public services.
CRediT authorship contribution statement
Ali Uyar: Conceptualization, Methodology, Supervision, Validation,
Writing - review & editing. Khalil Nimer: Conceptualization, Writing -
11
Technological Forecasting & Social Change 166 (2021) 120597
review & editing. Cemil Kuzey: Data curation, Methodology, Formal
analysis, Writing - review & editing. Muhammad Shahbaz: Conceptu­
alization, Supervision. Friedrich Schneider: Data curation,
Methodology.
Declarations of Competing Interest
None.
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Dr. Ali Uyar is currently a Professor of Accounting at Excelia Business School, France. He
holds a Ph.D. in Accounting and Finance, and prestigious international CMA certification
granted by IMA (USA). His research interests are corporate governance, sustainability/CSR
performance/reporting, and management accounting. His works have been published in
prominent journals including Journal of Cleaner Production, Expert Systems with Applica­
tions, Journal of Intellectual Capital, Australian Accounting Review, Advances in Accounting,
Managerial Auditing Journal, Research in Accounting Regulation, Transport Policy, Tourism
Economics, International Journal of Public Administration, Journal of International Accounting,
Auditing, and Taxation, International Journal of Auditing, Energy Policy, International Journal
of Production Economics, International Journal of Hospitality Management.
Dr. Khalil Nimer is an Associate Professor of accounting and finance at Gulf University for
Science and Technology, Kuwait. He obtained his Ph.D. in Accounting and Finance from
Manchester Metropolitan University, UK in 2005. He has been in the academic field for
more than 22 years with several publications in different reputable journals. His research
interest lies within the sustainability reporting, Tax evasion and International Financial
Reporting Standards (IFRS).
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Technological Forecasting & Social Change 166 (2021) 120597
Dr. Cemil Kuzey is an Associate Professor at Murray State University, USA. He is primarily
teaching Operation Research and Statistics topics for Social Sciences. He acquired his Ph.
D. degree in Business Administration in the Department of Quantitative Analysis at
Istanbul University, Turkey. Among his academic pursuits, he took several graduate
courses at the Ontario Institute for Studies in Education, University of Toronto, Canada.
His research interests are related to Operation Research, Data Mining, and Business In­
telligence. His papers have been published in various prominent journals including Journal
of Cleaner Production, Expert Systems with Applications, Decision Support Systems.
Dr. Muhammad Shahbaz is Professor (Tenured) of Energy Economics, School of Man­
agement and Economics, Beijing Institute of Technology, Beijing, China. He is Visiting
Research Fellow at the Department of Land Economy, University of Cambridge. He was the
Chair Professor at Energy and Sustainable Development, Montpellier Business School
France. He received his Ph.D. in Economics from National College of Business Adminis­
tration and Economics, Lahore Campus, Pakistan. His research focuses on development
economics, energy economics, environmental and tourism economics etc. He has widely
published in peer-reviewed international journals. He has published more than 325
research papers so far.
Dr. Friedrich Schneider is Professor of Economics at Johannes Kepler University of Linz
Since 1986, Austria, and since 2006 he is Research Professor at the DIW Berlin, Germany.
He obtained his Ph.D. in Economics from the University of Konstanz in 1976 and has since
held numerous visiting and honorary positions at a number of universities (e.g. at Aarhus
University, Aarhus, Denmark; La Trobe University, Melbourne, Australia; University of
Saarbrücken. Saarbrücken, Germany; Otago University, Dunedin, New Zealand). He has
published extensively in leading Economics journals including The American Economic
Review, The Quarterly Journal of Economics, The Economic Journal and the Journal of Eco­
nomic Literature. He was the editor of the Journal of Public Choice from 1991 to 2004.