Tax Aggressiveness Research Articles

IRS Audit Detection Risk and Firm Tax Behavior: Can Tax Fraud Be Deterred by Increasing IRS Budgets?

ABSTRACT This paper examines whether tax fraud and aggressive tax positions at firms are affected by changes in the IRS budget. Changes in a firm’s risk profile affect many users of financial information including the IRS, forensic accountants, and investors among others. We find that concurrent IRS resources are related to firms’ tax aggression and tax fraud likelihood and that they explain incrementally more of these tax decisions at a firm than historical information often used in prior literature. Taken together, our results suggest that firms increase their tax risk profile thus more tax aggression and higher likelihood of tax fraud when they believe IRS scrutiny will be lower.

Faktor-Faktor Yang Mempengaruhi Corporate Social Responsibility Pada Perusahaan Property dan Real Estate Yang Terdaftar Di Bursa Efek Iindonesia Tahun 2018-2022

This research aims to determine the factors that influence corporate social responsibility in property and real estate companies listed on the Indonesian Stock Exchange in 2018-2022. This research uses a quantitative type of research with a sampling technique using a purposive sampling method and a data collection technique using documentation data taken from the Indonesian Stock Exchange. Data were analyzed using descriptive statistical tests, normality tests, classical assumption tests, multiple linear regression tests, hypothesis tests and coefficient of determination tests with the help of SPSS. The results of this research show that simultaneously tax aggressiveness and liquidity have an effect on corporate social responsibility in property and real estate companies listed on the Indonesian Stock Exchange in 2018-2022, then partially tax aggressiveness has no effect on Corporate Social Responsibility in property and real estate companies listed on the Indonesian Stock Exchange in 2018-2022, while liquidity influences Corporate Social Responsibility in property and real estate companies listed on the Indonesian Stock Exchange in 2018-2022.

Tax havens reexamined: The impact of global digital tax reforms on international taxation

This review delves into the evolving landscape of tax havens in the wake of comprehensive digital tax reforms. This study scrutinizes the implications of global efforts to address tax evasion and profit shifting, particularly in the context of the digital economy. With the proliferation of digital services and cross-border transactions, traditional tax frameworks have struggled to capture the economic activities of multinational corporations operating in cyberspace. Consequently, tax havens have emerged as facilitators of aggressive tax planning strategies, exacerbating global tax inequalities and eroding fiscal sovereignty. Against this backdrop, the study analyzes the efficacy and repercussions of recent digital tax reforms spearheaded by international organizations and individual nations. It examines the implementation challenges, compliance burdens, and potential loopholes associated with these reforms. Moreover, the research evaluates the impact of digital tax measures on the behavior of multinational enterprises, exploring their responses in terms of tax planning strategies and business models. Furthermore, the study investigates the broader implications of digital tax reforms on international taxation dynamics, including their influence on tax competition, investment flows, and economic development. Special attention is paid to the implications for developing countries, which often bear the brunt of revenue losses resulting from profit shifting to tax havens. By synthesizing empirical evidence, policy analysis, and theoretical insights, this study offers a comprehensive reevaluation of tax havens in the digital age. It sheds light on the complex interplay between technological advancements, regulatory frameworks, and global economic dynamics shaping contemporary tax landscapes.

Investigating CSR Disclosures and Aggressive Financial Reporting in Relation to Tax Aggressiveness: Can Board Structure Change The Status Quo?

In recent years, academic researchers and policymakers have increasingly discussed the role of Corporate Social Responsibility (CSR) disclosures and aggressive financial reporting in tax aggressiveness. Tax aggressiveness can be defined as a company's eagerness in using legal loopholes and other methods of tax reduction. Companies must evaluate how their tax practices affect their reputation and adhere to tax reporting and CSR standards. The objective of this research is to investigate in the relationship between CSR disclosures and aggressive financial reporting on tax aggressiveness moderated by board structures. The board's internal control function is expected to reduce tax aggressiveness-related risks. The study employed static panel data regression analyses on 665 firm-year data from the Indonesia Stock Exchange from 2016 to 2020. This study discovered that a larger board size could diminish the negative relationship between CSR disclosure and tax aggressiveness in particular industries while strengthening the positive relationship between aggressive financial reporting and tax aggressiveness. The current work suggests that companies with more independent boards of directors could increase the negative association between CSR disclosure and tax aggressiveness while reducing the positive association between aggressive financial reporting and tax aggressiveness. This study could reference future corporate policy regarding the most effective board structures to minimise tax aggressiveness.

Effect of capital intensity, leverage, liquidity, moderated by company size on tax agressiveness (Empirical study on energy companies listed on the Indonesia Stock Exchange for the 2018-2022 period)

Purpose: This study examines the effect of capital intensity, leverage, and liquidity on tax aggressiveness and profitability as moderating variables on tax aggressiveness. Method: This study used Energy companies listed on the Indonesia Stock Exchange, selected using the purposive sampling method from 2018 to 2022 and there were 23 companies chosen. The data analysis in this study used panel data regression with views. Results: Capital intensity has a negative effect on tax aggressiveness; leverage and liquidity have no effect on tax aggressiveness; company size can moderate the effect of capital intensity on tax aggressiveness, but company size cannot moderate the effect of leverage and liquidity on tax aggressiveness.

THE INFLUENCE OF INSTITUTIONAL OWNERSHIP, LEVERAGE, AND FINANCIAL DISTRESS ON TAX AGGRESSIVENESS

This study was inspired to look at the factors that influence the practice of tax aggressiveness seen in financial factors and corporate governance. The research was then developed by proving other factors that strengthen the importance of the company's information breadth in eliciting a response from the market that can affect the level of tax aggressiveness, namely financial distress. The object of this research is companies in the Real Estate & Property Services Sector listed on the Indonesia Stock Exchange (IDX) during the 2019–2022 period. The samples taken from this study were taken using the purposive sampling method, which resulted in a total of 15 companies for 4 years. The results of research on institutional ownership, leverage, and financial distress on tax aggressiveness can be concluded that institutional ownership and leverage have no effect on tax aggressiveness, while financial distress affects tax aggressiveness with a negative coefficient direction, proving empirically that when companies face financial difficulties, their top priorities tend to maintain liquidity and meet urgent financial obligations.

Agresivitas Pajak, Environmental Performance, Leverage dan Likuiditas, terhadap Corporate Social Responsibility Disclosure dengan Profitabilitas sebagai Pemoderasi

The focus of this study is the company's lack of attention and awareness of social responsibility, which results in conflicts between companies and communities regarding the impact of company operations. This shows that there are multiple factors that influence corporate social responsibility. The purpose of this research is to find out how tax aggressiveness, environmental protection, leverage, and liquidity affect the disclosure of corporate social responsibility, with profitability as a moderator. This research was conducted on 19 consumer non-cyclic companies listed on the Indonesia Stock Exchange during the 2017-2021 period, using a purposive sampling technique. Data were analyzed using panel data regression using E-Views 12.0. The results show that tax aggressiveness has a significant negative effect on CSR disclosure, while leverage has a positive effect on CSR disclosure. Environmental protection and salary have no effect on CSR disclosure. Profitability cannot reduce tax aggressiveness, level of environmental protection, and disclosure of corporate social responsibility, but can strengthen or reduce the effect of liquidity on social responsibility. Keywords: Corporate Social Responsibility Disclosure, Tax Aggressiveness, Environmental Performance, Leverage, Liquidity, Profitability.

Pengaruh Profitabilitas, Leverage, Dan Likuiditas Terhadap Agresivitas Pajak (Studi Empiris Perusahaan Sektor Energi yang terdaftar di Bursa Efek Indonesia Tahun 2018-2020)

This study aims to examine the effect, profitability, leverage, and liquidity on tax aggressiveness in Energy sector companies listed on the Indonesia Exchange in 2018-2020. The research data is secondary data in the form of financial reports from the company. While the population in this study were all Energy sector companies listed on the Indonesia Stock Exchange in 2018-2020. Sampling in research using purposive sampling method where the population is 72 companies. In accordance with the selected sample criteria, the companies sampled in this study were 24. The data analysis used is multiple linear regression. The results of this study indicate that Profitability, Leverage and Liquidity have no simultaneous effect on tax aggressiveness with a significant value of 0.288, profitability has no effect on tax aggressiveness with a significant value of 0.797, Leverage has no effect on tax aggressiveness with a significant value of 0.467, Liquidity has no effect on tax aggressiveness with a significant value of 0.058.

Pengaruh Intensitas Persediaan, Ukuran Perusahaan Dan CSR Terhadap Agresivitas Pajak Dengan Koneksi Politik Sebagai Variabel Moderasi

Tax aggressiveness is a form of income design practice carried out by companies to minimize taxes that must be paid illegally. The percentage of tax aggressiveness actions taken by manufacturing companies reaches 23%. This study aims to determine and analyze tax aggressiveness with koneksi politiks as a moderating variable, which is known to be closely related to aggressive corporate tax avoidance activities. The independent variables used in this study are inventory intensity, company size, and corporate social responsibility (CSR). This study uses descriptive quantitative methods and purpsive sampling, while the data collection uses secondary data in the form of financial reports and company annual reports. The population in this study are manufacturing companies listed on the Indonesia Stock Exchange during the 2019-2021 period. The study population was 368 companies with a sample acquisition of 80 data and a total observation of 240 data over a 3-year period. The data analysis method uses multiple linear regression and moderated analysis regression (MRA) and data processing using SPSS 24. The results of this study indicate that inventory intensity and CSR have no effect on tax aggressiveness, company size has a positive effect on tax aggressiveness, koneksi politiks are unable to moderate inventory intensity and CSR on tax aggressiveness, koneksi politiks are able to moderate company size on tax aggressiveness.

Effect Of Financial Distress On Tax Aggressiveness With Company Reputation As A Moderating Variable

One of the obstacles faced in collecting tax revenues is the practice of tax aggressiveness by the company. In conditions of financial constraints, the strategy of saving cash for taxes is the manager's main choice to maintain company cash because it does not have a bad impact on company operations. The company's reputation is an intangible asset that is seen as important to improve the company's performance so as to encourage business sustainability and the quality of the company's future. The purpose of this study was to examine the effect of financial distress on tax aggressiveness with the company's reputation as moderating. The method used is quantitative with the object of manufacturing companies listed on the Indonesia Stock Exchange (IDX). The results of the study indicate that financial distress has a positive effect on tax aggressiveness. The company's reputation is not able to weaken the positive influence of financial distress on tax aggressiveness.

The Influence of Corporate Social Responsibility, Profitability, Liquidity, and Leverage on Tax Aggressivity

Purpose:The phenomenon that occurred in 2019, PT. Adaro Energy Tbk. Do something avoidance related to payment tax by implementing transfer pricing through the branch. The Company is located in Singapore and is called Coaltrade Services International. From 2009-2017, information via child company pays tax amounting to 125 million USD or Rp. 1.75 trillion ( exchange rate Rp. 14,000) or more small from it should be charged in Indonesia. Study This aims To analyze the influence of corporate social responsibility, Profitability, liquidity and Leverage on aggressiveness tax on IDX30 companies listed on the Indonesian Stock Exchange in 2020-2022.Methodology:This study is based on a deep data study, using secondary data from IDX30 companies listed on the Indonesian Stock Exchange from 2020 to 2022. 13 companies were included in the study and selected through a purposive sampling method. The data was analyzed using multiple linear regression, a statistical technique used to analyze the relationship between multiple independent variables and a dependent variable.Findings:Research results show that corporate social responsibility positively and significantly impacts aggressiveness tax. Implication:On the other hand, Profitability, liquidity, and Leverage are not influential factors in aggressive tax.

Implementation of the «Two-Pillar Solution» prospects in the international taxation system

The world economy has undergone a rapid digital transformation, which has caused critical discussions about the effectiveness of existing international tax systems. Traditional norms and rules are proving insufficient to solve the dynamic challenges associated with the development of the digital economy, where new sources of value creation and innovative business models challenge the established norms of profit distribution and relationships. At the same time, intangible sources of value creation contribute to tax avoidance by transnational corporations. Base Erosion and Profit Shifting (BEPS) rules are becoming a key initiative to counter these challenges. The article identifies the difficulties in reforming the modern international tax system, emphasizing the need for constant dialogue, cooperation, and adaptation to changing economic conditions. A two-step solution is an important tool in the fight against aggressive tax planning. Current discussions highlight the complex nature of the impact of the digital economy on international tax rules. Effective monitoring of the implementation and impact of the two-step solution is critical to areas for improvement, with international cooperation through the OECD playing a central role in this reform process. The BEPS rules are seen as a critical solution in the evolution of international tax policy in overcoming the challenges associated with the digital economy. The success of the implementation of the two-step solution initiative depends on effective cooperation between countries, in particular in the context of agreements on the avoidance of double taxation. The internal adaptability of this tool has the potential to improve the efficiency of the international tax system, as it directly addresses the challenges and conditions of the digital economy.

Aggressive tax planning as a threat to national security

The article examines the strategies of aggressive tax planning as a threat to state security. Aggressive tax planning practices are becoming more common. This poses multifaceted challenges to fiscal policy, economic stability, and national security. By conducting a comprehensive analysis of applied strategies, economic impacts, and potential policy measures, this study aims to provide information on the complex mechanism of tax evasion. The article discusses various strategies that companies use in aggressive tax planning. These strategies cover offshore tax havens, transfer pricing manipulation, royalty movement, "fine capitalization" and tax deferral, each of which uses legal nuances to minimize tax liabilities. The study examines the economic consequences of aggressive tax planning, focusing on significant revenue losses for governments around the world. Eroding tax revenues through aggressive tax planning reduces states ' ability to finance basic public services, contributing to budget deficits and economic instability. In addition, it creates material inequality, contributes to social unrest, and jeopardizes the nation's ability to solve national security problems. By analyzing these economic implications, this study highlights the urgency of considering aggressive tax planning as a fiscal and national security issue.

Impact of Corporate Social Responsibility, Profitability, Leverage, and Capital Intensity on Tax Aggressiveness: The Moderating Role of Firm Size in Indonesian Manufacturing Sector

Impact of Corporate Social Responsibility, Profitability, Leverage, and Capital Intensity on Tax Aggressiveness: The Moderating Role of Firm Size in Indonesian Manufacturing Sector

Peran Moderasi ukuran perusahaan pada Determinan Agresivitas Pajak pada Perusahaan Manufaktur yang Terdaftar di BEI

This research was conducted with the aim of testing and analyzing the effect of profitability and leverage on tax aggressiveness moderated by company size partially or moderately. The population in this study were all manufacturing companies listed on the Indonesia Stock Exchange, while the sample that met the sampling criteria for observations was carried out for five years and there were thirty-three manufacturing companies listed on the Indonesia Stock Exchange. This research approach uses associative research. The data collection technique in this research uses documentation techniques and the analysis technique used is MRA Interaction analysis. The research results show that profitability has no effect on tax aggressiveness, leverage has no effect on tax aggressiveness, company size does not moderate the effect of profitability on tax aggressiveness and company size does not moderate the effect of leverage on tax aggressiveness in manufacturing companies listed on the Indonesia Stock Exchange.

The Role of Indonesian Business Owners in Aggressive Tax Planning

Objective: The objective of this study is to investigate the impact of firm characteristics, specifically leverage and profitability, on aggressive tax planning in public sector mining companies listed on the Indonesia Stock Exchange for the period of 2012-2016, with family ownership as a moderating variable. Theoretical Framework: This research draws upon established theories in finance and corporate governance to examine the relationship between firm characteristics and aggressive tax planning. Key theories include agency theory, which helps to understand the dynamics between owners and managers in decision-making processes, and the pecking order theory, which sheds light on how firms choose between internal and external financing options Method: The methodology adopted for this research comprises a quantitative approach utilizing data from 12 mining sector public companies over a five-year period, resulting in a sample size of 60. Data was processed using SPSS version 22.0 and Warp Pls 5.0. Leveraging both statistical analysis and structural equation modeling, the study explores the influence of leverage, profitability, and family ownership on aggressive tax planning. Results and Discussion: The findings indicate that leverage positively influences aggressive tax planning, while profitability exhibits a negative association. Furthermore, when moderated by family ownership, leverage demonstrates an amplified positive effect on aggressive tax planning, while profitability displays a strengthened negative impact. These results underscore the significant role of family ownership in shaping tax planning strategies within publicly listed companies. Research Implications: The practical implications of this research extend to corporate governance practices and tax planning strategies within the public sector mining industry. Understanding the interplay between firm characteristics and family ownership can inform policymakers and practitioners in enhancing transparency and accountability in tax-related decision-making processes. Originality/Value: This study contributes to the existing literature by examining the influence of firm characteristics on aggressive tax planning within the context of family ownership, particularly in the Indonesian market. By shedding light on the nuanced relationships between these variables, this research provides valuable insights for scholars, practitioners, and policymakers aiming to mitigate tax-related risks and promote responsible corporate behavior.

Identifying Profit-Shifting to Tax Havens using statistics on Country-by-Country Reports

Profit-Shifting is an aggressive tax planning activity that erodes public revenues worldwide. Using statistics based on recent Country-by-Country Reports, this article identifies both descriptively and econometrically the existence of such activity by large Spanish multinationals in EU tax havens. Moreover, the paper shows that the application of the minimum Effective Tax Rate of 15% to profits generated in other EU countries by these large multinationals, within the Two-Pillar solution of the OECD/G20 Inclusive Framework, could increase Spanish tax revenue by around 2- 17% of annual corporate income tax.

Analysis Of The Influence Of Family Ownership, Corporate Governance, Company Size And Gender Diversity On Tax Aggressivity Of Mining Companies In Indonesia

Using corporate governance as a moderating variable, this study attempts to examine the effects of firm size, institutional ownership, family ownership, and gender diversity on tax aggression. This study uses quantitative methods. The IDX-registered mining and CPO enterprises make up the study's population. Purposive sampling was the method employed by the researcher to choose the sample gathering strategy. Through documentation and a review of the literature, the researcher gathered data for this investigation. The data analysis approach employs hypothesis testing, data quality testing, and descriptive statistics based on the goals of the research. The study's findings provide important new information about the variables influencing tax aggressiveness in the corporate setting. First, the study shows that tax aggression is highly influenced by the size of the company. Second, corporate tax aggression is significantly shaped by institutional ownership. Furthermore, it has been demonstrated that family ownership affects tax aggression. Findings, however, indicate that management decisions about tax aggressiveness are not significantly impacted by gender diversity. It's interesting to note that the effects of corporate governance differ according to the independent variables that are measured. Corporate governance cannot increase the impact of gender diversity or family ownership on tax aggression, but it also cannot increase the impact of firm size. Corporate governance, however, has the power to amplify institutional ownership. These findings provide in-depth insight into the complexity of factors that influence tax aggressiveness practices in companies and can be a basis for developing management strategies and company policies in the future.

Corporate Tax Planning: What Is a Tax Planner To Do After Deans Knight?

The authors of this article review the current jurisprudential landscape surrounding tax-avoidance cases, in both the general anti-avoidance rule (GAAR) and non-GAAR contexts, for the purpose of assisting tax planners. The authors begin by addressing the challenges of achieving perfect certainty in the interpretation of tax provisions other than GAAR. They discuss how the background of judges can affect the decision-making process. They then review recent non-GAAR jurisprudence, highlighting instances where courts reject unacceptable tax plans and underscoring the courts’ generally unsympathetic stance toward aggressive tax plans that appear to defy common sense. The authors then analyze the Supreme Court of Canada’s decisions in <i>Canada v. Alta Energy Luxembourg SARL</i> and <i>Deans Knight Income Corp. v. Canada</i>. They compare the two decisions in detail and suggest how taxpayers might respond to these seemingly divergent judgments. Turning to the recently proposed amendments to GAAR, the authors question the necessity of these changes, in light of the Supreme Court’s recent guidance on the application of the provision in <i>Deans Knight</i>. The article concludes by offering practical suggestions for tax planners with the aim of equipping them to navigate GAAR in implementing tax plans.

THE IMPACT OF PROFITABILITY AND LEVERAGE ON TAX AGGRESSIVENESS WITH INCOME SMOOTHING AS THE MEDIATOR

Information asymmetry and differences in interests between agents and principals are unavoidable problems in agency relationships. Agents with better information than other parties try to maximize their benefits by managing or manipulating reported accounting numbers. Profitability and leverage are common considerations for companies in carrying out income smoothing so that profits are stable and the company looks in good condition in the eyes of stakeholders. In addition, it is also related to the size of the corporate tax burden, so both can be factors that influence the level of corporate tax aggressiveness. This study aims to analyze the direct and indirect effects of profitability and leverage on tax aggressiveness and test the mediation of income smoothing on the effect of profitability and leverage on tax aggressiveness. The research sample was determined using a purposive sampling technique of 26 consumer non-cyclical sector companies listed on the Indonesia Stock Exchange in 2018-2020. Data were analyzed using the WarpPLS 7.0 analysis tool. The results of this study show that profitability and leverage affect tax aggressiveness. However, income smoothing does not affect tax aggressiveness. Income smoothing could not mediate the effect of profitability and leverage on tax aggressiveness. There is no indirect effect between profitability and leverage on tax aggressiveness.