Liquidity, Profitability and Operational Costs on Corporate Income Tax

Bertilia Lina Kusrina,Putri Desti Fatwah Fatimah

doi:10.52728/ijtc.v2i4.335

Bertilia Lina Kusrina, Putri Desti Fatwah Fatimah

Open Access

https://doi.org/10.52728/ijtc.v2i4.335

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Abstract

Tax revenue is the largest source of income for the Indonesian state. One of the contributors to state revenue from the tax sector is corporate income tax. Financial performance is one measure of the success of a business entity which is expected to increase revenue from corporate income tax. This study aims to determine the effect of financial performance using variable liquidity ratios, profitability ratios, and operating costs on corporate income tax. The data used is secondary data, namely annual financial report data from large trading sub-sector companies (wholesale) listed on the Indonesia Stock Exchange (IDX) for the 2014-2018 period. The analytical method used is multiple regression analysis. The results showed that partially profitability and operating costs have an effect on corporate income tax, while liquidity has no effect on corporate income tax. Simultaneously, liquidity, profitability and operating costs affect corporate income tax. Based on the results obtained that the ratio that affects corporate income tax is profitability and operating costs, so as an implication the internal party/management must be careful with the information presented in the financial statements which will have a negative impact on the users of financial statements, especially on operating costs.

Highlights

Up to date, taxes are the biggest source of income in Indonesia
This study aims to determine the effect of financial performance using variable liquidity ratios, profitability ratios, and operating costs on corporate income tax
The results showed that partially profitability and operating costs have an effect on corporate income tax, while liquidity has no effect on corporate income tax

Summary

Introduction

Taxes are the biggest source of income in Indonesia. From the data on the state budget of revenues and expenditures in 2018, of the state revenue at Rp 1.894.73 trillion rupiah, the 1.618,1 trillion came from taxation or it is 85 percent of the state revenue. The percentage of the proportion of tax revenue from the total receipts in the state budget decreased from 2018 to 2019 but the acceptance of taxation from 2018 to 2019 increased at 168.3 trillion. From this proportion, it can be seen that tax revenues are still expected to be the backbone of national income. Lines of credit are the dominant source of liquidity for companies around the world, comprising about 15% of assets, while less than half of the cash held by companies is held for Liquidity, Profitability and Operational Costs on Corporate Income Tax Kusrina, & Fatimah non-operational purposes, comprising about 2% of assets. Operating performance and is usually associated with higher corporate values for both countries in spite of differences in structural characteristics or in financial system of a firm (Wang, 2002)

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