Abstract:     The digital transformation of enterprises is the micro-foundation for the development of digital economy, and it is also the necessary way to build digital China. How to play the incentive effect of fiscal and taxation tools to promote the digital transformation of enterprises is particularly urgent. Based on the data of China′s A-share listed companies from 2014 to 2020, we constructed a difference-in-differences (DID) model to investigate the impact and path of the 2018 VAT credit refunds policy on enterprise digital transformation. The study found that (1) the VAT credit refund can significantly promote the digital transformation of enterprises, and its effect is more obvious for enterprises at the growth stage, traditional industries and regions with good network infrastructure. (2) The mechanism test showed that capital, technology and talent are the three channels of influence, and the VAT credit refund strengthens the digital transformation of enterprises by easing financing constraints, increasing R&D investment and promoting human capital upgrading. (3) The economic consequences test found that digital transformation helps constrain firms′ strategic behavior, and significantly inhibits tax avoidance activities. This paper will provide empirical clues on the path and logic of tax instruments to incentivize enterprises′ digital transformation, which will intuitively inspire for further increasing tax cuts and improving targeted tax incentives.

Key words: VAT credit refund, enterprise digital transformation, difference-in-differences (DID), text analysis