The Impact of Changes in Tax Regulations on Corporate Tax Avoidance Practices in Indonesia

Abstract

Using a quantitative approach using Structural Equation Modeling with Partial Least Squares (SEM-PLS), this study examines the effects of tax law changes on business tax evasion practices in Indonesia. The research delves into the moderating impacts of industry type and economic conditions, in addition to the mediating roles of corporate financial structure and firm size. Each of the 150 companies in the sample, which come from a variety of industries, offers insightful information about their operational and financial traits. The findings show that corporate tax avoidance and changes in tax laws have a substantial positive correlation, which is mediated by company financial structure and business size. The moderating effects of business type and economic conditions are evident, underscoring the significance of industry-specific characteristics and contextual economic factors in comprehending the behavior of corporation taxes. Policymakers, tax authorities, and enterprises can benefit from the findings, which offer practical insights for formulating and enforcing tax policies.