The Effect Of Liquidity, Profitability, Capital Intensity, Company Size, And Corporate Social Responsibility On Tax Aggressiveness In Manufacturing Companies Listed On The Indonesia Stock Exchange In 2016-2020

Feb 28, 2025 by ADMIN 210 views

The Effect of Liquidity, Profitability, Capital Intensity, Company Size, and Corporate Social Responsibility on Tax Aggressiveness in Manufacturing Companies Listed on the Indonesia Stock Exchange in 2016-2020

Introduction

Tax aggressiveness has become a significant concern for governments and regulatory bodies worldwide. The increasing complexity of tax laws and regulations has led to the development of sophisticated tax avoidance strategies, which can have a negative impact on government revenue and the economy as a whole. In Indonesia, the tax authority has been actively working to combat tax evasion and aggressive tax planning. However, the effectiveness of these efforts depends on various factors, including the characteristics of the companies involved.

This study aims to investigate the effect of liquidity, profitability, capital intensity, company size, and corporate social responsibility (CSR) on tax aggressiveness in manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2016-2020 period. The findings of this study can provide valuable insights for investors, regulators, and companies to make informed decisions related to taxes.

Methodology

This study uses a descriptive statistical analysis, classical assumption tests, regression tests, and hypothesis tests with the help of IBM SPSS 26 software. The independent variables in this study include liquidity, profitability, capital intensity, company size, and CSR, while the dependent variable is tax aggressiveness. The population of this study includes 177 manufacturing companies listed on the IDX, with purposive sampling techniques and 32 companies as samples. The data used is secondary data.

Results

The results of this study show that partially, the profitability and company size variables have a positive and significant influence on tax aggressiveness. This means that the higher the profitability and size of the company, the higher the tax aggressiveness. However, liquidity variables, capital intensity, and CSR do not have a significant influence on tax aggressiveness in manufacturing companies listed on the IDX.

Simultaneously, liquidity, profitability, capital intensity, company size, and CSR affect the tax aggressiveness in manufacturing companies listed on the IDX. This means that together, these variables are able to explain variations in tax aggressiveness.

Deeper Analysis

Profitability and Company Size

The results show a positive and significant relationship between profitability and company size and tax aggressiveness. This means that companies with high profitability and large sizes tend to be more aggressive in minimizing their tax obligations. This can be associated with several factors:

Strategic considerations: Large and profitable companies may have more resources to allocate to experienced tax teams and complex tax reduction strategies.
Management pressure: Managers in large and profitable companies may face greater pressure to achieve profitability targets, which can encourage them to find ways to minimize tax obligations.
Access to information and expertise: Large companies have easier access to information and expertise about tax regulations, which allows them to take advantage of tax reduction opportunities more effectively.

Liquidity, Capital Intensity, and CSR

This study found that liquidity, capital intensity, and CSR had no significant influence on tax aggressiveness. These results can be interpreted as follows:

Liquidity: Although liquidity can help companies in manipulating cash flows to minimize taxes, this study shows that this factor is not dominant in determining tax aggressiveness in manufacturing companies in Indonesia.
Capital intensity: Although investment in fixed assets can provide tax benefits, this study shows that capital intensity has no significant influence on tax aggressiveness in manufacturing companies in Indonesia.
CSR: This finding shows that manufacturing companies in Indonesia have not significantly adopted CSR-based tax reduction strategies. This can be associated with lack of tax incentives for companies involved in CSR activities.

Implications

The findings of this study provide some important implications:

For investors: Investors can consider profitability and company size as an indicator of potential tax aggressiveness. Investors can assess risk and investment opportunities based on these factors.
For regulators: This research highlights the importance of the role of the regulator in overseeing the aggressiveness of the company's taxes. Regulators can consider strengthening tax regulations and increase supervision of companies that have the potential to make tax avoidance.
For companies: Manufacturing companies need to be aware of the effect of profitability and company size on tax aggressiveness. Companies need to develop an ethical and transparent tax reduction strategy.

Conclusion

This study shows that profitability and company size have a positive and significant influence on tax aggressiveness in manufacturing companies in Indonesia. Liquidity, capital intensity, and CSR have no significant influence. It is essential for investors, regulators, and companies to understand the implications of these findings in making decisions related to taxes.

Recommendations

Based on the findings of this study, the following recommendations are made:

Regulatory bodies: Strengthen tax regulations and increase supervision of companies that have the potential to make tax avoidance.
Companies: Develop an ethical and transparent tax reduction strategy.
Investors: Consider profitability and company size as an indicator of potential tax aggressiveness when making investment decisions.

By understanding the factors that influence tax aggressiveness, investors, regulators, and companies can make informed decisions that promote a fair and transparent tax environment.
Frequently Asked Questions (FAQs) about the Effect of Liquidity, Profitability, Capital Intensity, Company Size, and Corporate Social Responsibility on Tax Aggressiveness in Manufacturing Companies Listed on the Indonesia Stock Exchange in 2016-2020

Q: What is tax aggressiveness, and why is it a concern for governments and regulatory bodies?

A: Tax aggressiveness refers to the practice of minimizing tax obligations through various means, such as tax avoidance strategies, transfer pricing, and other forms of tax evasion. It is a concern for governments and regulatory bodies because it can lead to a loss of government revenue and undermine the fairness of the tax system.

Q: What are the independent variables in this study, and how do they relate to tax aggressiveness?

A: The independent variables in this study are liquidity, profitability, capital intensity, company size, and corporate social responsibility (CSR). These variables are related to tax aggressiveness in that they can influence a company's ability to minimize its tax obligations.

Q: What are the findings of this study regarding the relationship between liquidity and tax aggressiveness?

A: This study found that liquidity has no significant influence on tax aggressiveness in manufacturing companies listed on the Indonesia Stock Exchange (IDX). This means that companies with high liquidity levels do not necessarily engage in tax avoidance strategies.

Q: What are the findings of this study regarding the relationship between profitability and tax aggressiveness?

A: This study found that profitability has a positive and significant influence on tax aggressiveness in manufacturing companies listed on the IDX. This means that companies with high profitability levels are more likely to engage in tax avoidance strategies.

Q: What are the findings of this study regarding the relationship between capital intensity and tax aggressiveness?

A: This study found that capital intensity has no significant influence on tax aggressiveness in manufacturing companies listed on the IDX. This means that companies with high levels of investment in fixed assets do not necessarily engage in tax avoidance strategies.

Q: What are the findings of this study regarding the relationship between company size and tax aggressiveness?

A: This study found that company size has a positive and significant influence on tax aggressiveness in manufacturing companies listed on the IDX. This means that larger companies are more likely to engage in tax avoidance strategies.

Q: What are the findings of this study regarding the relationship between CSR and tax aggressiveness?

A: This study found that CSR has no significant influence on tax aggressiveness in manufacturing companies listed on the IDX. This means that companies that engage in CSR activities do not necessarily engage in tax avoidance strategies.

Q: What are the implications of this study for investors, regulators, and companies?

A: The findings of this study have implications for investors, regulators, and companies. Investors should consider profitability and company size as indicators of potential tax aggressiveness when making investment decisions. Regulators should strengthen tax regulations and increase supervision of companies that have the potential to make tax avoidance. Companies should develop an ethical and transparent tax reduction strategy.

Q: What are the limitations of this study?

A: This study has several limitations, including the use of secondary data and the limited sample size. Future studies should aim to address these limitations and provide a more comprehensive understanding of the factors that influence tax aggressiveness.

Q: What are the recommendations of this study?

A: Based on the findings of this study, the following recommendations are made:

Regulatory bodies should strengthen tax regulations and increase supervision of companies that have the potential to make tax avoidance.
Companies should develop an ethical and transparent tax reduction strategy.
Investors should consider profitability and company size as indicators of potential tax aggressiveness when making investment decisions.

By understanding the factors that influence tax aggressiveness, investors, regulators, and companies can make informed decisions that promote a fair and transparent tax environment.