The Effect of Sales Growth, Responsibility, and Institutional Ownership on Tax Avoidance with Profitability as Moderating Variables

Abstract

This research examines the effect of sales growth, corporate social responsibility, and institutional ownership on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2019. This study relies on secondary data obtained from annual reports obtained from the official website of the Indonesia Stock Exchange, namely www.idx.co.id and www.sahamok.com. The total sampling used is 41 companies for this study. The software used is E-Views 11.0. The findings of this study indicate that corporate social responsibility, profitability, and institutional ownership, which are moderated by profitability, have an impact on tax avoidance. Meanwhile, sales growth had no effect on tax avoidance, and profitability proved unable to balance sales growth and corporate social responsibility in terms of tax avoidance. Good governance is needed to fulfil corporate social responsibility obligations in a company and has been proven to help company management to suppress tax avoidance practices.

Tax Avoidance Mediated by Constitutional Ownership as Moderating Variables

“…However, these findings contrast with the study carried out by Iwanty & Surjandari (2022). Profitability has a significant negative effect on tax avoidance.…”

“…Profitability seems to positively influence avoidance (Darsani & Sukartha, 2021;Sonia & Suparmun, 2019). However, even so, profitability negatively influences tax avoidance (Iwanty & Surjandari, 2022). However, the evidence of a significant influence of Return on Assets on tax avoidance was also discovered (Andika et al, 2021;Harahap, 2021).…”

The Impact Profitability, Leverage and Firm Size on Disclousure of Corporate Social Responsibility

“…Dilihat dari penerapan corporate social responsibility memiliki perbedaan antara perusahaan besar maupun perusahaan kecil [16]. Perusahaan manufaktur adalah sebuah badan usaha yang menjalankan pengoperasiaan, mesin dan tenaga kerja dalam suatu proses yang mana mengubah bahan mentah menjadi barang jadi yang mempunyai nilai jual [17]. Berdasarkan hal tersebut perusahaan manufaktur memiliki keterikatan hubungan yang erat terhadap lingkungan sosial [18].…”

Analysis of Factors That Influence Tax Avoidance in the Food and Beverage Industry

“…Another study by (Yahaya & Yusuf, 2020) examined tax avoidance practices in multinational companies and found that large companies with international operations tend to take advantage of differences in tax rates between countries to optimize their tax structures and increase net profitability. Research by (Iwanty & Surjandari, 2022) found that companies with larger sizes tend to use more debt in their capital structure, which can be used to take advantage of existing tax savings. Finally, research by (Listiyana et al, 2019) shows that companies with larger sizes can have better access to complex tax knowledge and qualified tax advisors, which allows them to design effective tax avoidance strategies, so researchers formulate the following hypothesis:…”