Abstract
Purpose: This study aims to develop and explore the regulation role of Indonesian tax reform (ITR) by referring to the tax incidences theory. This study, therefore, focuses on the potential forward and backward shifting impacted by the tax reform. ITR influences corporate capital expenditures, production capacity, and labor cost proportion to total production cost. Design/methodology/approach: The study uses data from the manufacturing sector listed in the Indonesian capital market from 2004 to 2013. Data is analyzed using panel data regression and includes the common, fixed and random effect model. Findings: This study reveals that ITR directly does not influence export performance nor indirectly through the forward shifting effect. On the other hand, ITR is effective in boosting Indonesian manufacturing export performance through the backward shifting. Capital expenditure furthermore plays a crucial factor in ITR success. Originality/value: This study highlights that Indonesian export performance has increased followed the tax reformation.
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