Tax Payment Revenue Ratio as Tax Risk Analysis for Manufacture Industry in Indonesia after Tax Amnesty Policy

Muhammad Rifky Santoso,Erlina Erlina

doi:10.32535/ijabim.v5i2.855

Abstract

Indonesia’s Tax Amnesty potentially will increase state tax revenues in rupiah; however, it cannot increase tax compliance as measured by the tax ratio value. Tax audit as a law enforcement needs to be carried out on taxpayers with high risk in utilizing tax amnesty policies for tax avoidance. By comparing the ratio of tax payment revenue (TPR) in manufacturing companies listed on IDX, this study finds that most of the samples are indicated to have a high risk of tax avoidance, since the value of TPR is significantly lower when the tax amnesty is enacted, compared to that prior to the enactment. To determine which taxpayers are doing illegal tax avoidance and need to be audited, further analysis is necessary for those with significant TPR reduction, one of which is by analyzing the financial ratios. This method is possibly used for each industry due to its different characteristics. It facilitates both the tax authority to increase taxpayer compliance and the taxpayer to make tax planning.

Highlights

If the market mechanism is purely applied, it will not be efficient since economic agents have to look for prices every day
The tax amnesty policy adopted in Indonesia is intended to increase government revenues from the tax sector as well as to increase the level of taxpayer compliance in the future
When the tax amnesty introduced in 2016 and 2017, there was an increase in tax revenues in rupiah, it was not concurrent with the increase in taxpayer compliance as the tax ratio measured

Summary

Introduction

If the market mechanism is purely applied, it will not be efficient since economic agents have to look for prices every day. This will be challenging and causes transaction costs (Coase, 1937). To overcome this condition, Coase (1937) proposed the theory of the firm. A long-term contract is made to facilitate the pricing. The establishment of the company forms the long-term contracts amongst the firm and the main customers and suppliers. Major customers and suppliers will influence management in carrying out company operations to maximize profits such as carrying out tax planning strategies (Huang, Lobo, Wang, & Xie, 2016)

Methods

Results

Conclusion