What Motivates Companies to Avoid Tax?

Yenny Rachmad, Nuraini A Nuraini A, Fifi Yusmita

Abstract


Main Purpose - This study looks into whether transfer pricing, corporate social responsibility, and leverage are factors that motivate companies to undertake tax avoidance of non-financial companies on the Indonesia Stock Exchange (IDX).

Method - The sample consisted of 86 companies that were randomly selected by simple random sampling from 2017 to 2019. A total of 603 data observations consisting of the annual reports of 52 domestic companies and 34 multinational companies were analyzed by use of multiple linear regression with IBM SPSS 21 software.

Main Findings – This study implies that the majority of companies consider the practice of tax avoidance to be unethical, the results show that the tier of tax-avoidance practices in companies that are listed on the IDX is very low. On the other hand, transfer pricing, corporate social responsibility, and leverage do not affect tax avoidance since those are not factors that cause companies to avoid taxes.

Theory and Practical Implications - Most companies in Indonesia view tax avoidance as unethical even though it is legal. These findings are expected to contribute to regulators in setting tax-avoidance arrangements in Indonesia.

Novelty - Compared to other studies, this study examines tax avoidance practices from an ethical perspective.


Keywords


unethical; tax avoidance; transfer pricing; corporate social responsibility; leverage

Full Text:

PDF

References


Alm. J. (2014). Does an uncertain tax system encourage “aggressive tax planning”? Economic Analysis and Policy. 44(1). 30–38.

Armstrong. C. S.. Blouin. J. L.. Jagolinzer. A. D.. & Larcker. D. F. (2015). Corporate governance. incentives. and tax avoidance. Journal of Accounting and Economics. 60(1). 1–17.

Audric. R. (2019). Transfer Pricing Dalam Negeri. Nusatax.Com. http://nusatax.com/transfer-pricing-dalam-negeri/

Azis A. S. A. (2019). Pengaruh Transfer Pricing. Capital Intencity dan Political Connection terhadap Tax Avoidance dengan Corporate Governance dengan Variabel Moderasi. Universitas Islam Negeri Alauddin Makassar.

Darma. S. S. (2019). Pengaruh related party transaction dan thin capitalization terhadap strategi penghindaran pajak. Jurnal Ilmiah Akuntansi Universitas Pamulang P-ISSN. 2339. 867.

Davis. A. K.. Guenther. D. A.. Krull. L. K.. & Williams. B. M. (2016). Do socially responsible firms pay more taxes? The Accounting Review. 91(1). 47–68.

Firmansyah. A.. & Yunidar. A. (2020). Financial Derivatives. Financial Leverage. Intangible Assets. and Transfer Pricing Aggressiveness: Evidence from Indonesian Companies. Jurnal Dinamika Akuntansi Dan Bisnis. 7(1). 1–14.

Gupta. S.. & Newberry. K. (1997). Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data. Journal of Accounting and Public Policy. 16(1). 1–34.

Hanlon. M.. & Heitzman. S. (2010). A review of tax research. Journal of Accounting and Economics. 50(2–3). 127–178.

Heckemeyer. J. H.. & Overesch. M. (2017). Multinationals’ profit response to tax differentials: Effect size and shifting channels. Canadian Journal of Economics/Revue Canadienne d’économique. 50(4). 965–994.

Huseynov. F.. & Klamm. B. K. (2012). Tax avoidance. tax management and corporate social responsibility. Journal of Corporate Finance. 18(4). 804–827.

Initiative. G. R. (2013). Pedoman Laporan Berkelanjutan G4. Amsterdam Global Reporting Initiative (GRIb).

Kim. J. H.. & Im. C. C. (2017). The study on the effect and determinants of small-and medium-sized entities conducting tax avoidance. Journal of Applied Business Research (JABR). 33(2). 375–390.

Klassen. K. J.. Lisowsky. P.. & Mescall. D. (2017). Transfer pricing: Strategies. practices. and tax minimization. Contemporary Accounting Research. 34(1). 455–493.

Kraus. A.. & Litzenberger. R. H. (1973). A state-preference model of optimal financial leverage. The Journal of Finance. 28(4). 911–922.

Kurniasih. T.. Sari. R.. & Maria. M. (2013). Pengaruh return on assets. leverage. corporate governance. ukuran perusahaan dan kompensasi rugi fiskal pada tax avoidance. Buletin Studi Ekonomi. 18(1). 44276.

Laguir. I.. Staglianò. R.. & Elbaz. J. (2015). Does corporate social responsibility affect corporate tax aggressiveness? Journal of Cleaner Production. 107. 662–675.

Lanis. R.. & Richardson. G. (2012). Corporate social responsibility and tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy. 31(1). 86–108.

Lin. K. Z.. Cheng. S.. & Zhang. F. (2017). Corporate social responsibility. institutional environments. and tax avoidance: evidence from a subnational comparison in China. The International Journal of Accounting. 52(4). 303–318.

Luthfi. M.. Mulyani. M.. & Ningsih. E. S. (2014). Pengaruh Ukuran Perusahaan. Profitabilitas. Leverage Operasi Dan Net Profit Margin Terhadap Tindakan Perataan Laba (Income Smoothing) Pada Perusahaan Food And Beverages Di Bursa Efek Indonesia (BEI) Periode 2007-2011. Jurnal Riset Akuntansi Dan Manajemen Malahayati. 3(1).

Mao. C.-W. (2019). Effect of corporate social responsibility on corporate tax avoidance: evidence from a matching approach. Quality & Quantity. 53(1). 49–67.

Modigliani. F.. & Miller. M. H. (1963). Corporate income taxes and the cost of capital: a correction. The American Economic Review. 53(3). 433–443.

Muller. A.. & Kolk. A. (2015). Responsible tax as corporate social responsibility: The case of multinational enterprises and effective tax in India. Business & Society. 54(4). 435–463.

Nasional.kontan.co.id. (2019). Pemerintah semakin sulit mengejar penerimaan pajak dari sektor pertambangan. Nasional.Kontan.Co.Id. https://nasional.kontan.co.id/news/pemerintah-semakin-sulit-mengejar-penerimaan-pajak-dari-sektor-pertambangan

Prakosa. K. B. (2014). Pengaruh profitabilitas. kepemilikan keluarga. dan corporate governance terhadap penghindaran pajak di indonesia. Simposium Nasional Akuntansi 17 Mataram.

Richardson. G.. & Taylor. G. (2015). Income shifting incentives and tax haven utilization: Evidence from multinational US firms. The International Journal of Accounting. 50(4). 458–485.

Richardson. G.. Taylor. G.. & Lanis. R. (2013). Determinants of transfer pricing aggressiveness: Empirical evidence from Australian firms. Journal of Contemporary Accounting & Economics. 9(2). 136–150.

Sugianto. D. (2019). Mengenal soal penghindaran pajak yang dituduhkan ke adaro. Finance.Detik.Com. https://finance.detik.com/berita-ekonomi-bisnis/d-4612708/mengenal-soal-penghindaran-pajak-yang-dituduhkan-ke-adaro

Tiwa. E. M.. Saerang. D. P. E.. & Tirayoh. V. (2017). Pengaruh pajak dan kepemilikan asing terhadap penerapan transfer pricing pada perusahaan manufaktur yang terdaftar di BEI tahun 2013-2015. Jurnal EMBA: Jurnal Riset Ekonomi. Manajemen. Bisnis Dan Akuntansi. 5(2).

Zhou. Y. (2011). Ownership structure. board characteristics. and tax aggressiveness.




DOI: https://doi.org/10.17509/jaset.v15i1.51844

Refbacks

  • There are currently no refbacks.


Creative Commons License

Jurnal ASET (Akuntansi Riset) is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. 

View My Stats Visitor