Blockchain Based Tax Administration and Fraud Reduction in Public Revenue Systems

Abstract

Purpose: This study examines how blockchain-based tax administration influences fraud reduction in public revenue systems and evaluates whether the Regulatory and Institutional Environment strengthens this relationship across internationally comparable public revenue authorities. The analysis investigates the effects of blockchain transparency, blockchain security, blockchain automation, and blockchain data management on reducing tax fraud while improving public revenue integrity.

Methodology: The study employs a balanced longitudinal panel comprising 41 public revenue authorities selected from an international population of 112 authorities implementing blockchain-enabled tax administration between 2015 and 2025, generating 451 authority-year observations. Secondary data were obtained from internationally recognized taxation, governance, and digital government databases. The empirical analysis applies a moderated two-way fixed-effects panel regression supported by panel unit root tests, construct validation, diagnostic testing, Hausman specification, and robustness analyses to establish reliable causal inference.

Results/Analysis: The findings reveal that blockchain transparency, blockchain security, blockchain automation, and blockchain data management each exert positive and statistically significant effects on fraud reduction in public revenue systems. These effects operate through enhanced transaction traceability, immutable record verification, automated compliance enforcement, secure information management, and improved interagency data sharing. The Regulatory and Institutional Environment significantly strengthens these relationships, indicating that effective legal frameworks, institutional capacity, regulatory standards, government support, and stakeholder collaboration amplify the governance benefits of blockchain technologies. Diagnostic and robustness tests confirm the stability, validity, and consistency of the estimated relationships.

Originality/Value: This study advances Institutional Theory, Agency Theory, and Contingency Theory by conceptualizing blockchain-based tax administration as an integrated governance capability whose effectiveness depends on institutional readiness rather than technological deployment alone. It introduces a multidimensional international framework linking complementary blockchain capabilities, institutional conditions, and fraud reduction using harmonized longitudinal evidence. The findings provide practical guidance for governments, tax administrations, and policymakers seeking to strengthen tax compliance, improve public revenue integrity, and accelerate secure digital transformation in public financial management.

Type of paper: Empirical Research paper.