Huimin Yang Asia Europe Institute, University of Malaya, Kuala Lumpur, Malaysia, 50603.
Email: 22100698@siswa.um.edu.my
Rajah Rasiah Asia Europe Institute, University of Malaya, Kuala Lumpur, Malaysia, 50603.
Email: rajah@um.edu.my

Abstract:

VAT exemptions alleviate financial burdens for agricultural enterprises, enabling them to allocate resources towards the adoption of advanced digital technologies. This study utilises existing tax data alongside records on agricultural activities and digital adoption to examine the role of tax incentives in fostering technological advancements within environmentally sustainable agricultural practices. Employing a quantitative methodology, the study applies statistical and econometric techniques to assess the impact of VAT exemptions on farmers' decisions to implement digital agricultural technologies. The findings indicate that tax incentives enhance the financial feasibility of acquiring smart agricultural technologies and IoT equipment for sustainable farms. In large enterprises, digital transformation is directly linked to revenue generation, as VAT incentives facilitate the adoption of new technologies. The study further highlights that government initiatives and business scale influence the effectiveness of VAT exemptions in modernising agricultural practices. VAT exemption policies support enterprises in integrating sustainable technologies, enhancing operational efficiency while mitigating environmental impact. Through a difference-in-differences (DID) approach, the research evaluates the influence of VAT exemption policies on digital transformation. Using panel data from 50 green agricultural enterprises spanning 2015 to 2022, the study analyses digital investment, high-quality development indicators, and sustainable agricultural initiatives. Robustness checks and fixed-effects models yield reliable results, affirming VAT policies as key drivers of green innovation and sustainable development. The findings underscore the significance of tax policies in sustainable agriculture and demonstrate how aligning economic incentives with technological advancements fosters higher-quality growth. Policymakers should develop comprehensive tax frameworks complemented by support mechanisms to maximise the effectiveness of VAT exemptions.

Keywords:High-Quality Development of Enterprises (Green Development); Digital Transformation; Agricultural Economy; VAT Exemption Policies and Sustainable Agriculture.