The development of smart taxation is a crucial measure for improving the tax administration system, and also an important support for optimizing the allocation of market resources and enhancing the modernization of industrial and supply chains. In terms of function, leveraging modern information technologies, smart taxation can effectively address issues like information asymmetry, high coordination costs, and challenges in compliance supervision among upstream and downstream firms within industrial chains, thereby enhancing inter-firm collaborative linkage. However, the impact of the development of smart taxation on inter-firm specialization and coordination within industrial chains has not been fully demonstrated.

Taking the fully digitalized electronic invoice (FDEI) pilot as an example, this paper uses micro-level data on supply chains of Chinese listed firms from 2017 to 2023, adopts a staggered DID approach, and systematically investigates the impact and mechanisms of the development of smart taxation on inter-firm specia-lization and coordination within industrial chains. The study finds that the development of smart taxation significantly promotes the inter-firm specialization and coordination within industrial chains. Mechanism testing shows that this positive effect is mainly achieved by reducing transaction search costs and improving business compliance standards. Heterogeneity analysis shows that the promoting effect is more pronounced in cities with stronger government intervention capabilities, higher market integrity levels, and better regional government-firm relationships. Further research also shows that the specialization and coordination effect generated by smart taxation helps firms focus their R&D efforts on core production processes, thereby achieving deeper-level breakthroughs in innovation.

The marginal contributions of this paper are as follows: First, it is the frist to analyze the economic effects of smart taxation from the perspective of the inter-firm specialization and coordination within industrial chains, enriching the literature on smart taxation and deepening the understanding of its economic effects. Second, it uses the FDEI pilot to reflect the development of smart taxation, which better captures the “smart” core of smart taxation. Third, it expands the research horizons on specialization and coordination, and contri-butes to providing targeted, feasible, and effective policy recommendations for accelerating the development of smart taxation and achieving high-quality development of industrial and supply chains.