Exploring the intricacies of tax planning: a novel insight from the Indonesian context

Istianingsih Sastrodiharjo and Aloysius Harry Mukti

Cogent Business & Management, 2024, vol. 11, issue 1, 2348709

Abstract: This study ventures into the underexplored realm of tax planning in Indonesia, a domain where extensive research is still in its nascent stage but critically vital. Amidst the Indonesian government’s reliance on taxation for fostering inclusivity, this research delves into the impact of ownership structures and earnings management on tax avoidance practices. By collecting and analyzing data from 90 companies listed on the Indonesia Stock Exchange from 2017 to 2020, encompassing 344 firm-years, this study employs multiple linear regression to dissect the complexities involved. The findings reveal that insider ownership and earnings management negatively influence tax avoidance, whereas institutional and blockholder ownership exhibit a positive impact. These insights offer a fresh perspective on how incentives for tax evasion vary across different ownership structures and management levels, highlighting how opportunistic behavior in earnings management can indicate a propensity toward tax avoidance.Our research investigates the intriguing connection between different types of company ownership and tax avoidance strategies among manufacturing companies listed on the Indonesia Stock Exchange from 2017 to 2020. This study is particularly relevant to the general public as it sheds light on how companies manage their finances and taxes, impacting Indonesia’s economy and, consequently, its citizens. We explore how insider, institutional, and blockholder ownerships influence companies’ approaches to tax avoidance, providing insights that are crucial for understanding corporate financial behavior. These findings are significant for anyone interested in corporate governance, ethical business practices, and the economic health of the nation. By bringing these issues to the forefront, our research aims to foster greater transparency and accountability in the corporate sector, contributing to a more informed public discourse on financial and tax-related matters.

Date: 2024
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DOI: 10.1080/23311975.2024.2348709

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