Digital Transformation and GST Revenue Performance: Implications for Rate Policy Design

Abstract

This paper examines how digital transformation in tax administration modifies the relationship between Goods and Services Tax (GST) rates and revenue performance. Using a mixed-methods approach combining cross-country econometric analysis, digital capability assessment, and case studies, the research develops a comprehensive understanding of how technological advancement conditions the revenue implications of different rate structures. The findings demonstrate that jurisdictions with advanced digital capabilities experience substantially stronger revenue effects from rate changes, with approximately 45% higher revenue elasticities compared to technologically limited environments. Digital transformation appears particularly influential in moderating revenue losses from rate reductions, suggesting expanded policy space for rate optimization strategies in digitally advanced administrative contexts. The research identifies key technological components that most significantly influence these relationships, with automated verification systems and advanced analytics demonstrating stronger effects than basic electronic filing or payment capabilities alone. Based on these findings, the paper develops a context-sensitive framework for rate policy design that explicitly incorporates digital transformation status as a critical parameter alongside traditional economic and administrative considerations.