Research Objective: The objective of this study is to clarify the role of the electronic invoice as a form of tax digitalization in reducing tax avoidance practices. This is achieved by providing a comprehensive perspective on the impact of electronic invoicing on tax performance efficiency, data accuracy, and the enhancement of tax revenues.
Research Methodology: The researchers adopted a quantitative analytical approach by designing a questionnaire distributed for data collection purposes. The study sample consisted of (394) individuals, including accountants from the Tax Authority, taxpayers with the authority, academics from faculties of commerce and business administration in Egyptian universities, tax inspectors within the Tax Authority, certified public accountants, and IT unit officials within the Egyptian Tax Authority. Non-parametric tests were employed due to the non-normal distribution of the data.
Research Findings: The study found that the implementation of the electronic invoicing system in Egypt, supported by binding legislation and deterrent penalties, has contributed to enhancing tax compliance, reducing the informal economy, and improving the efficiency of tax audits. The results also revealed a strong relationship between electronic invoicing and the reduction of tax avoidance. All sub-hypotheses and the main hypothesis confirm the positive role of electronic invoicing, as a form of tax digitalization, in limiting tax avoidance practices. Accordingly, the findings emphasize the importance of implementing the electronic invoicing system in increasing compliance levels, ensuring transparency, and reducing financial disputes between the Tax Authority and taxpayers, along with other previously mentioned benefits.
Research Recommendations: The study recommends the development of comprehensive tax legislation, the adoption of a differentiated policy based on firm size, and increased investment in both technological and human infrastructure.
Originality and Contribution: The scientific originality of this study lies in addressing a research gap by focusing specifically on “tax avoidance,” rather than tax evasion or the general performance of the tax invoicing system.