Abstract
This study aims to analyze the effect of executive characteristics and family ownership as a stimulus factor for tax avoidance and to see the existence of a political relationship as a moderating variable in the effect of executive characteristics and family ownership on tax avoidance. This research was conducted on manufacturing companies listed on the Indonesia Stock Exchange during 2017-2019. In this study, the sample was determined based on the purposive sampling technique with the criteria that the sample company was manufacture listed on the IDX for three consecutive years from 2017-2019, published an annual report in the 2017-2019 period sequentially, did not experience delisting, was not a company the IPO in 2018-2019, did not experience any losses and did not have an ETR value of more than 1. The research sample was obtained from as many as 138 companies with 3 years of observation. This study uses multiple linear regression analysis (Multiple Regression Analysis) and Moderate Regression Analysis (MRA) using the Statistical Product and Service Solution (SPSS) program. The results showed (I) executive characteristics had a significant positive effect on tax avoidance (II) family ownership had a significant negative effect on tax avoidance (III) political connections were not able to strengthen the executive's positive influence on tax avoidance (IV) political connections weakened family ownership on tax avoidance. This study can also show that the sample companies tend to comply with tax rules, they avoid sanctions and fines, and consider the risk of loss that must be faced by the company when proven to do tax avoidance.
Highlights
The government continues to increase the potential for state revenue because taxes are considered the main source of state revenue to meet state expenditure needs
The results of this study indicate that H1 is accepted or the characteristics possessed by executives can increase their courage in tax evasion
The results of this study are in line with research conducted by Butje & Tjondro (2014); Pitaloka & Merkusiwati (2019) which shows that executive characteristics have a positive effect on tax avoidance
Summary
The government continues to increase the potential for state revenue because taxes are considered the main source of state revenue to meet state expenditure needs. Companies have a different view on taxes. Taxes are considered by many companies as a large cost without making a direct contribution as well as reducing the availability of corporate cash flows (Chen et al, 2010). In Indonesia, one indication of tax avoidance is evidenced by the low level of tax compliance seen from the current tax ratio (Rusydi & Martani, 2014). Based on data from the Ministry of Finance, Indonesia's 2017-2019 tax ratio values were 10.7%, 11.5%, and 10.7%, respectively. The current state of Indonesia's tax ratio, when compared to other Asian countries, is still said to be below. According to Organization for Economic Cooperation and Development (OECD) data, Malaysia's tax ratio in 2017 was 13.6%, Singapore 14.1%, Philippines 17.5%, and Thailand 17.6% (Cnbcindonesia, 2019)
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