THE EFFECT OF TAX AVOIDANCE ON FIRM VALUE: THE MEDIATING ROLE OF AGENCY COST AND MODERATING ROLE OF FAMILY OWNERSHIP

This study aims to investigate the effect of tax avoidance on firm value with the mediating role of agency cost and moderating role of family ownership. Firm value is measured with Tobin’s Q, tax avoidance was measured with effective tax rate and agency cost was measured with asset turnover or sales to total ssset ratio. This research adopted F-PEC index developed by Astrachan, Klein, & Smyrnios (2002) to measure family ownership. Population of this research were non financial firms listed on IDX. Samples were taken for the year 2012-2016 and was collected by purposive sampling method where researcher established some criteria to be the research data. Panel data analysis on Eviews 10 was used to test the research data. This research find that tax avoidance significantly have positive effect on firm value. The results of this research prove that investor in Indonesia react positively to tax avoidance or do not consider tax avoidance practice as long as their interests are met. Furthermore, tax avoidance significantly have negative effect on agency cost, and agency cost significantly have negative effect on firm value. Tax avoidance negatively affects the agency costs because in doing tax avoidance, the agent strives to fulfill the principal's interests by providing higher after-tax profits, so that the interests of both parties are met and the conflicts and agency costs are likely to decrease. The path analysis result do not proven that tax avoidance have indirect effect on firm value through agency cost. Another finding is family ownership does not moderate the effect of tax avoidance on firm value. There are no different effect related to tax avoidance and firm value between low family ownership and high family ownership

PENGARUH UKURAN PERUSAHAAN, LEVERAGE, DAN KEPEMILIKAN INSTITUSIONAL TERHADAP TAX AVOIDANCE DENGAN PROFITABILITAS SEBAGAI VARIABEL MODERASI (STUDI PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA (BEI))

This study aims to examine the effect of firm size, leverage, and institutional ownership on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange (BEI) for the 2019-2021 period. The independent variables used are firm size, leverage, and institutional ownership. Meanwhile, the dependent variable used is tax avoidance, measured using the CETR measure and the connecting variable used is profitability. This study uses secondary data in the form of annual reports. Determining the research sample using the purposive sampling method and getting 90 samples based on certain criteria. The results of this study indicate that firm size has no effect on tax avoidance. Meanwhile, leverage and institutional ownership influence tax avoidance. Profitability is able to moderate firm size on tax avoidance, while profitability is not able to moderate leverage and institutional ownership on tax avoidance

Tax avoidance, tax evasion, and tax flight: Do legal differences matter?

Although from an economic point of view, legal considerations apart, tax avoidance, tax evasion and tax flight have similar effects, namely a reduction of revenue yields, and are based on the same desire to reduce the tax burden, it is likely that individuals perceive them as different and as unequally fair. Overall, 252 fiscal officers, business students, business lawyers, and entrepreneurs produced spontaneous associations to a scenario either describing tax avoidance, tax evasion, or tax flight, and evaluated it as positive, neutral or negative. The results indicate that social representations differ with respect to tax avoidance, tax evasion, and tax flight. Tax evasion was perceived rather negatively, tax flight neutrally, and tax avoidance positively. Tax knowledge was found not to be correlated neither with tax avoidance nor with tax evasion.tax evasion; social representations; tax knowledge

Tax avoidance or tax evasion? : the difference between tax avoidance and tax evasion is the thickness of a prison wall (Denis Healey)

This article seeks to distinguish clearly between tax avoidance and tax evasion. These concepts are not new to the field of taxation as they have been contested since 1900. Tax avoidance is a means by which tax payers reduce tax liability by planning their affairs so as to attract the least tax possible but still acting within the provisions of the Income Tax Act. Tax evasion is an illegal action as it constitutes a deed where the person is breaching the provisions found in the Income Tax Act. In response to tax avoidance and evasion, the legislator has introduced a number of anti-avoidance provisions which are both specific, tailor-made for certain articles, and also general. This paper shall discuss such provisions with the help of local and UK case law.peer-reviewe

PENGARUH CAPITAL INTENSITY, CORPORATE SOCIAL RESPONSIBILITY (CSR), DAN FINANCIAL DISTRESS TERHADAP PENGHINDARAN PAJAK (TAX AVOIDANCE)

Tax avoidance is a tax avoidance strategy and technique that is carried out legally and safely because it does not conflict with tax provisions. The methods and techniques used are by exploiting weaknesses (gray areas) contained in the tax laws and regulations themselves. This study aims to empirically prove the effect of capital intensity, corporate social responsibility, and financial distress on tax avoidance. The population used in this study is manufacturing companies in the goods and consumption sector listed on the Indonesia Stock Exchange for the 2021-2022 period. Sample selection using purposive sampling. Based on the sample selection criteria for manufacturing companies in the goods and consumption sector listed on the Indonesia Stock Exchange, 71 company samples were obtained. The type of data used in this study is secondary data, data collection methods using documentation methods. The data analysis methods used are multiple linear regression analysis and robust analysis using the STATA program. The results of the study concluded that (1) capital intensity affects tax avoidance. (2) Corporate social responsibility has no effect on (tax avoidance). (3) Financial distress has effect on tax avoidance. Keywords: Capital Intensity, Corporate Social Responsibility, Financial Distress, Tax Avoidanc

Majority Voting and the Welfare Implications of Tax Avoidance

A benchmark result in the political economy of taxation is that majority voting over a linear income tax schedule will result in an ine±ciently high tax rate whenever the median voter has a below average income. The present paper examines the role of tax avoidance for this welfare assessment. We find that the inefficiency in the voting equilibrium is the lower, the higher the average level of tax avoidance in the economy, or equivalently, the lower the median voter's amount of avoidance. The result holds for endogenous avoidance and labor choice and, under certain conditions, for an endogenous enforcement policy.Tax avoidance, welfare analysis, majority voting, median voter equilibrium

Municipal Income Tax "Fix" is a Flub: Legislators should cut tax avoidance, not invite it

A major rewrite of the state law governing Ohio municipal income tax is being discussed in Columbus. A proposal to overhaul the tax -- House Bill 601 -- was introduced late last year, and the General Assembly will see a revised version afterit convenes this month. A significant effort to overhaul Ohio's municipal income tax should crack down on tax avoidance, guarantee a broad tax base, and ensure that those most able to pay are in fact doing so. In some instances, however, House Bill 601 allows tax avoidance to continue, or even creates new avenues to avoid the tax. When this issue is taken up in the next General Assembly, this should be corrected

Voting over tax schedules in the presence of tax avoidance

This paper reconsiders the classical problem of majority voting over tax schedules, adding the possibility to avoid taxes. In this setting preferences over tax schedules are not determined by earned income, but rather by taxable income, which depends on the joint decisions of labor supply and tax avoidance investments. The ordering of earned- and taxable income are shown to be the same if the tax avoidance function is log concave.Tax avoidance; Majority voting; Order-restricted preferences; Single-crossing condition

Reconciling Business Purpose with Bail-out Prevention: Federal Tax Policy and Corporate Divisions

Corporate divisions-spin-offs, split-offs, and split-ups-unfortunately pose a more complex problem than Senator Humphrey\u27s childlike vision would lead one to believe: the reconciliation of competing goals of maximizing business flexibility and minimizing tax avoidance. It is widely believed that divisions are essential to business planning; thus, tax-free treatment promotes business flexibility. Yet, an untaxed division may allow tax avoidance through bail-out of corporate earnings and profits at capital gain rates