We examine how improving the efficiency of a country’s tax system via the implementation of the information system affects firms’ behavior, utilizing the implementation of the Golden Tax Project III in China as a natural experiment. The Golden Tax Project III strengthens tax enforcement, while standardizes the application procedures for tax incentives. Based on a large-scale corporate tax survey data, we show that large firms enjoy better access to debt finance and increase take-up of tax benefits since the reform, while keeping their tax burden unchanged. The reform leads large firms to increase investment. On the contrary, the reform increases tax burden for small firms, which offsets the positive effect due to better access to debt finance. The reform has limited impact on small firms’ investment or take-up rate of tax incentives. Our study contributes to the debate on how adopting more efficient information system affects tax administration and firms’ real performances.