Abstract
Large tax receipts are essential for every country for its growth and development but it’s constrained by the fact that some people are not willing to pay taxes voluntarily and deliberately avoid tax in various ways. This research aims to examine the effect of corporate social responsibility, family ownership and audit quality on tax avoidance. This research also investigates whether audit quality can affect the causal relation of family ownership to tax avoidance. This research was conducted using non-financial firms. Total of sample that have met all the criteria was 158 companies which was registered on the Indonesia Stock Exchange (IDX) in the period of 2015-2019. Data obtained were tested with panel regression. Regression analysis results reveal that corporate social responsibility and tax avoidance are positively associated, corporation with high corporate social responsibility disclosure are less likely to engage in tax avoidance. Family ownership, on the other hand, affects tax avoidance negatively which means that family firms engage in more tax avoidance than non-family firms. Audit quality has a significant positive effect on tax avoidance but does not affect the relationship of family ownership to tax avoidance.
Highlights
Taxes are a major concern of companies because they affect profitability and become a burden to inhibit company growth
The highest disclosure of Corporate Social Responsibility was carried out by PT Unilever Indonesia Tbk amounting to 86.5% as many as 32 indicators from 37 indices, while the lowest disclosure of only 1 indicator occurred in a number of companies simultaneously
Hypothesis 3 Test Results The test results obtained from the dependent measurement of the effective tax rate and cash flow effective tax rate are not significant, but with a book tax difference, the results show a significance of 0.0242 with a coefficient of 0.037427 that shows that audit quality has a positive effect on tax avoidance
Summary
Taxes are a major concern of companies because they affect profitability and become a burden to inhibit company growth. Tax avoidance activities invite supervision by the government and the public (Zeng, 2018). It does not violate applicable laws and regulations, this action is considered immoral (Bae, 2017). To alleviate potential public concerns of the negative impact of tax aggressiveness and to show the public that the company has met community expectations, companies can carry out corporate social responsibility (Richardson, Taylor, & Lanis, 2013). Muzakki & Darsono (2015), Amidu, Kwakye, Harvey, & Yorke (2016), Hidayati & Fidiana (2017), Wiguna & Jati (2017), Zeng (2018), Setiawati & Adi (2020), obtained research results that corporate social responsibility has a negative effect on tax avoidance. Even Fourati, Affes, & Trigui (2019) indicate that corporate social responsibility has a strong impact on tax avoidance and both are complementary strategies
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