Ilomata International Journal of Tax and Accounting
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The Uncovering Tax Avoidance Drivers in IDX Mining Firms 2019-2021: Financial Distress, Thin Capitalization, and CSR Disclosure Effects
No full textIndonesia's low tax ratio compared to other Asia-Pacific nations may indicate the presence of tax avoidance. The Tax Justice Network has revealed that corporations are the primary culprits of tax avoidance in Indonesia, with mining companies being among the examples of such practices that have been exposed. Related to this phenomenon, this study seeks to acquire factual evidence on how financial distress, thin capitalization and the disclosure of corporate social responsibility affect the tax avoidance among mining firms publicly listed on the IDX during the period of 2019 to 2021. By utilizing purposive sampling technique, this study successfully selected 18 companies, generating a total of 54 observational data that were used for analysis. To obtain the required data, this study relied on secondary sources such as audited financial statements, annual reports and/or sustainable reports. The main approach employed for analyzing the data and testing hypotheses in this study was multiple linear regression analysis. The findings of the study demonstrate that financial distress has a significant negative impact on tax avoidance. However, the study did not find statistically significant evidence to support the impact of thin capitalization and corporate social responsibility disclosure on tax avoidance
The Mediating Effect of the Intention to Quit as the Impact of Locus of Control on Dysfunctional Audit Behavior
Full text linkAuditing is an essential process in maintaining accountability and transparency within an organization. However, some dysfunctional audit behaviors can threaten audit integrity and cause significant losses to the company. This study aims to prove whether or not the intention to quit can mediate the indirect effect between locus of control on auditor acceptance of dysfunctional audit behavior, especially in all Public Accounting Firms in East Java Region. This is a quantitative causality research, and the data source in this study are generated from the primary data. The data are obtained from the respondents' answers to questionnaires given to all auditors who work at public accounting firms in East Java region. The 11 items-questionnaire was distributed via Google form. The results indicated that locus of control has a positive effect on auditors’ acceptance of dysfunctional audit behavior, intention to quit has a positive effect on auditors’ acceptance of dysfunctional audit behaviors, and locus of control has a positive effect on the intention to quit. Finally, the intention to quit is able to mediate the indirect effect of locus of control on auditors’ acceptance of dysfunctional audit behaviors
The Effect of Earnings Management on Dividend Policy: Concentrated Ownership and Audit Committee Expertise as Moderating Variables
Full text linkDividend policy is one of the important decisions of a firm where this dividend policy is an important consideration for shareholders as an indicator of the firms success in managing the capital invested by investors. This study aims to provide empirical evidence of how earnings management affects dividend policy, then whether concentrated ownership and audit committee expertise can affect the relationship between earnings management and dividend policy. The research sample is a manufacturing company with a period of 2018-2022. The sample selection used a purposive sampling approach so that the total observations amounted to 128 observations. The results showed that earnings management has a remarkable effect on dividend coverage, concentrated ownership and audit committee expertise can affect the relationship between earnings management and dividend policy in an effective way. The effect proves that managers have the discretion to choose accounting methods to file better earnings as a way to signal the success of the firms management and on the other hand earnings control benefits focused ownership so that earnings management and concentrated ownership are complementary. This observation contributes to signal theory and firm theory in explaining the earnings control movement and focused ownership as moderating variables in explaining the relationship between earnings management and dividend coverage. The real implication of this research is that it can be used as a consideration for firms in making decisions regarding the proportion of dividends distributed, and can be a review tool for investors in investing
Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange
Full text linkTaxes are the main source of revenue in the State Budget (APBN) which accounted for 73% of all state revenue in 2019. Taxes have such an important role in sustaining the continuity of government and development. However, realized tax receipts never reached the target level between 2009 and 2020.This is because there are companies that carry out tax avoidance actions. The purpose of this study is to specifically analyze the variables that affect tax evasion in the LQ45 index companies of the Indonesian Stock Exchange. This research was conducted during the period 2017 –2022. The sampling technique used in this study is purposive sampling, in which criteria are determined based on the variables studied. The data analysis technique used is multiple simple linear regression analysis and a residual test for moderating variables. The F-test results show that institutional ownership, sales growth and Ln_total assets have a positive and insignificant effect on tax evasion. T-test results show that institutional ownership and sales growth have a negative and insignificant effect on tax evasion. However, Ln-Total_Asset has a negative and significant effect on tax evasion
The Influence of Profitability and Company Size on Tax Avoidance (A Case Study of Mining Companies Listed on the Indonesia Stock Exchange in 2018-2022)
Full text linkTax avoidance is a deliberate strategic approach that companies employ to reduce their tax liabilities while remaining compliant with relevant tax regulations. The complexity of tax avoidance arises from its dual nature, where, on one side, it remains within the bounds of legality, and yet, on the other side, it is deemed undesirable by the government due to its adverse impact on national revenue. The objective of this research is to investigate how both the size and profitability of a company influence its engagement in tax avoidance between mining companies listed on the Indonesia Stock Exchange (BEI) from 2018 to 2022. This research utilized a descriptive quantitative methodology and for sample was selected through purposive sampling, identifying 14 companies meeting predefined criteria. The data collected was subjected to analysis using IBM SPSS Statistics 25, which included Classical Assumption Tests, Multiple Linear Regression Analysis, and Hypothesis Testing. The results of this study indicated a noteworthy impact of profitability on tax avoidance, while the size of the company did not demonstrate a significant influence on tax avoidance. Moreover, the observation revealed that the joint consideration of both profitability and company size had a significant impact on tax avoidance
The Potential Financial Distress in Special Notation Companies on the Indonesia Stock Exchange: Prediction Model Approach
Full text linkThis research aims to predict the potential financial distress in companies with special notation on the Indonesia Stock Exchange during the period from January 1, 2021, to December 2022, using the Modified Altman Model (Z-Score) and the Springate Model (S-Score) approaches. Data for the study were obtained from the official website of the Indonesia Stock Exchange, employing purposive sampling as the sampling technique. Based on the criteria, a total of 280 research observations were obtained. The results indicate that both models can predict the potential financial distress of companies using financial ratios. Furthermore, the research findings reveal differences in the accuracy level of predicting potential financial distress between the Modified Altman Z-Score and Springate models. The Modified Altman Z-Score model demonstrates higher accuracy compared to the Springate model in predicting the potential financial distress of companies with special notation. This research provides important information for companies with special notation codes that experience financial distress, to immediately improve financial conditions, and provides a basis for strategic decision making to ensure the sustainability of the company and for investors and other interested parties can be used as a basis for investment decision making
Effect of External Audit Opinions and Audit Committees on Financial Resource Management in Public Sector Entities
Full text linkExternal audit opinions (EAO) and Audit committees (AC) have been studied in different contexts, yet the link between them and the management of financial resources, especially in government entities in Tanzania, has empirically not been captured. This paper examined the influence of EAO and AC on managing financial resources taking Tanzania government entities as a reference. It uses resources dependency theory to explain the main topic. Data were collected on 230 government entities from Controller and Auditor General (CAG) reports and audited financial statements for 2014/15 to 2019/20. Descriptive statistics and the Fixed effect technique were used to analyze data. The results show that unqualified audit opinion occurred most among public entities. Specifically, the qualified audit opinion occurred most in LGAs. Also, a significant frequency of AC weaknesses appeared in LGAs and Public BICA.Moreover, the estimation results show that audit report positively and significantly influences financial resource management (FRM), whereas AC weakness has a negative relationship with FRM. Therefore, the President’s office and the Parliament should emphasize the management of resources strategies in public entities, especially LGAs. This paper will add knowledge on EAO and AC as tools for financial resources management in government entities
Determinants of Tax Avoidance and Audit Quality as a Moderating Variable
Full text linkTaxes is The largest contribution for every country financial forecast. The Government maximizes their effort to be able increasing taxes, in order to accomplish the needs of their people. Companies are one of the biggest expenses of country need to be able to be financed. As a result, the government's efforts can create conflicts and it is not in line with the company's goals it self. The company will try to do a tax avoidance scheme in order to reduce the amount of the tax burden, however it will trigger various problems. Agency theory that can solve those problems that arise, from company as an agent. There are factors impact on tax avoidance, it consists of institutional ownership and corporate social responsibility. Audit quality is taken as a moderating variable, in analyzing the effect between the two independent variables, either strengthens or weakness. This type of research is quantitative research that uses the company's annual report as sources data. The sample in this study amounted to 43 mining companies listed on the Indonesia Stock Exchange in 2017-2019 and were selected based on purposive sampling technique. The results of data testing show that institutional ownership has no significant positive effect on tax avoidance, while corporate social responsibility has a significant positive effect on tax avoidance. Audit quality is showed to be able to weaken the influence of institutional ownership on tax avoidance and strengthen the influence of corporate social responsibility on tax avoidance
Utilization of Information and Communication Technology in the Tax Administration System to Increase Taxpayer Compliance
Full text linkAdaptation to changes based on information and communication technology (ICT) causes obstacles and community preparedness for the 5.0 age, also known as society 5.0. This necessitates the digital revolution of all disciplines, including taxation. Government efforts to promote taxpayer compliance include creating a contemporary tax administration system encompassing organizational structure, business processes, information and communication technology, human resource management, and applying good governance. In addition to the tax administration system, taxpayer knowledge also influences the level of taxpayer compliance. This study's objective is to investigate the use of ICT in a modern tax administration system to enhance taxpayer compliance. The main theory in this research is positive accounting theory which was developed by Watt & Zimmerman in 1986. This study employs a qualitative approach and descriptive methodologies. This study demonstrates that the incorporation of ICT is a component of the modernization of the tax administration system. Application of the e-tax system, which comprises E-Registration, E-SPT, E-Filing, E-Payment, Blockchain, Artificial Intelligence (AI), Chatbots, and Biometric Identification, can constitute the use of ICT in the tax administration system. Ease of service, particularly in filling out SPT electronically, or e-SPT, is the method for boosting taxpayer compliance with the modernization of the tax administration system utilizing ICT
Book-Tax Differences and Profit Growth: Evidence from Indonesia
Full text linkThis study aims to examine the effect of permanent and temporary differences as well as book-tax differences on profit growth in property and real estate firms listed on the Indonesia Stock Exchange (IDX). Permanent differences refer to the differences between taxable income and accounting income that cannot be reversed in the future, while temporary differences are the differences that will reverse over time. The study focused on the sub-sector of property and real estate, which was selected because these companies are considered high-risk and often adopt strategies to legally minimize their tax burden in order to maximize profits.. Purposive sampling was used to select a sample of 12 property and real estate firms that consistently published audited financial statements in Indonesian Rupiah from 2018 to 2021 and did not undergo delisting from the IDX during that period. The results of the analysis reveal that profit growth is positively and significantly influenced by both permanent and temporary differences. However, there was no significant impact observed from book-tax differences. These findings may provide insights for policymakers and investors in the property and real estate sector