Syntax Literate: Jurnal
Ilmiah Indonesia p–ISSN: 2541-0849 e-ISSN: 2548-1398
Vol. 9, No. 5, Mei 2024
FACTORS
AFFECTING TAX AVOIDANCE AT FOOD AND BEVERAGE COMPANIES
Caroline
Christie Sanjaya1*, Yuniarwati2
Universitas Tarumanagara, Jakarta, Indonesia1,2
Email: [email protected]*
Abstract
The purpose of this research to examine the factors
that influencing Tax Avoidance. Those factors are Profitability,
Leverage and Sales Growth to Tax Avoidance. The population of this research consists of food and beverage subsector
manufacturing companies listed in Indonesia Stock Exchange from
2020 to 2022. Samples are obtained through purposive sampling method, in which
only 33 food and beverage
companies meet all sampling criteria resulting 92
data available are taken as the samples. This research used multiple regression
method to test the effect of each variable in influencing tax avoidance. The research data was analyzed using SmartPLS Version 3 software. The result of
this research indicates that profitability have influence to tax avoidance,
while leverage and sales growth have no influence to tax avoidance.
Keywords: Tax Avoidance, Profitability, Leverage, Sales Growth.
Introduction
The
three types of state revenue in forming the Indonesian state budget are grants,
non-tax state revenues, and tax revenues (Rusdi, 2021). The tax sector
in Indonesia has a very strong influence on state revenue. This is evidenced in
the achievement of the State Budget every year, namely from 2020 to 2022 which
had decreased and then stabilized again. State revenues will be used for
infrastructure development, funding government projects, and other things that
have an impact on Indonesian society itself. The Covid-19 pandemic that lasted
from the beginning of 2020 has caused contraction in both the global and
domestic economies, resulting in declining tax revenues, especially revenues
related to the business world and international trade activities. In 2021, the
government's hard work efforts had an impact on economic performance which
gradually recovered, this was reflected in the increasing trend of taxation.
The trend of increasing taxes continues in 2022 with tax revenues of IDR
1,716.8 trillion. Economic performance in 2022 was supported by the successful
handling of Covid-19, the recovery of public consumption, investment, and
international trade. Companies contribute significantly to tax sector revenue
practices. However, as a taxpayer, the purpose of the company is contrary to
the government's goal which is to increase tax revenue. Various kinds of
strategies carried out by companies to save their tax liabilities, one of which
is tax management or tax avoidance. The company's ability to conduct tax
avoidance depends on a number of factors namely profitability, leverage, and
sales growth which will be used as independent variables in this study.
Agency
theory is closely related to tax avoidance practices, because it describes the
relationship between stakeholders and company management, in which both parties
work together to achieve company goals or profits. Stakeholders or shareholders
are also referred to as principals, while company management in agency theory
is referred to as agents. The principal has the power to authorize the agent to
carry out duties as management who manages and realizes the company's
activities and runs as desired by the principal. The relationship between
principal and agent is written in an agreement or cooperation contract and is
referred to as an agency relationship, where the agent performs certain tasks for the principal
which in principle is to provide the maximum benefit to the principal, so that the agent try
their best to fulfill their duties. Differences that often arise between principals
and agents can affect various aspects of a
company's performance, including company policies in terms of taxes. Because
there are conflicting interests and the Indonesian tax system that places
responsibility for taxpayers in calculating and reporting their taxes, this has
led to tax reduction efforts, namely by tax planning with tax avoidance
strategies (Tebiono &
Sukadana, 2019).
Relationship
Between Variables
Profitability
to Tax Avoidance. Profitability has a relationship
with the increase in profits of a company and the value of profits is also related
to the tax burden of a company, so the level of profitability can increase the
company's tax burden (Muslim & Junaidi, 2020). Companies with significant profitability can set up tax planning
to lower their tax burden (Putra & Kurnia, 2019). (Satria & Lunardi, 2023) stated that if a company generates high profits or
profits, shareholders will tend to prefer to invest in the company. Companies
that generate profits stably and are supported by shareholders state that the company's prospects are good and less likely to
carry out tax avoidance (Ramdhania & Kinasih, 2021).
Leverage
against Tax Avoidance. The amount of funding that the company uses from
third-party debt increases with the leverage ratio (Irwansyah et al., 2020). This leads to long-term debt or leverage on the company
that can lead to fixed costs, such as interest to be paid. (Tanjaya & Nazir, 2021) stated that the
higher the leverage ratio, the higher the debt owned by a company. The
company's debt burden is large, resulting in an increase in interest costs.
This is because interest expense is a deductible expense and has the potential
to cause the company's taxable profit to decrease (Kurniawan et al., 2021). The less tax a
company has to pay, the lower its taxable profit. Agency theory states that
sometimes companies take action to improve their performance (Wahyuningsih, 2020). As a result,
companies can try to do tax avoidance by using debt as funding.
Sales
Growth on Tax Avoidance. In agency theory, an agent will
manage the tax burden of a company, because sales growth can increase
company profits so that it incurs higher tax liabilities as well (Fionasari, 2020). Companies make
more money if sales increase and generate high profits so that they are in line
with the level of tax burden that will be borne. A large sales volume from a
company will provide an opportunity to generate profits so that the company has
the ability to pay taxes and does not need to do tax avoidance (Hidayat, 2018).
Hypothesis
Development
Profitability
will be one of the benchmarks for companies in conducting tax avoidance.
Companies that are able to earn profits are assumed to be able to manage their
income and tax liabilities to prevent tax avoidance.
Leverage
will be one of the benchmarks for companies in conducting tax avoidance.
Companies can use the interest earned through debt so that the tax paid is
reduced because the interest derived from debt can reduce taxes so that it can
be assumed that the higher the use of debt, the lower the tax burden borne by
the company.
Sales
Growth represents the success of a company in investing and becomes a benchmark
for companies in conducting tax avoidance. Tax avoidance is negatively affected
by sales growth, where companies that increase their sales and operate
efficiently will generate significant profits and do not need to do tax
avoidance. The higher the company's sales
growth, the lower the company conducts tax avoidance.
Figure 1. Hypothesis
Framework
The hypothesis of the research model is formulated as follows:
H1 : Profitability has a significant negative effect
on Tax Avoidance.
H2 : Leverage has a significant positive effect on
Tax Avoidance.
H3 : Sales Growth has a significant negative effect
on Tax Avoidance.
Research
Methods
The research
design used is causality with quantitative data. Purposive sampling This is the
method used in the sampling process and the following criteria must be met: (a) Food and beverage companies listed on the IDX in
the period 2020-2022, (b) Food and beverage companies that publish annual
financial statements consistently to the IDX and end on December 31, (c) Food
and beverage companies that use rupiah currency in issuing company financial
statements, (d) Food and beverage companies that earn net profit on financial
statements during the 2020-2022 period, (e) Food and beverage companies with
ETR values of >0 and <1. The dependent variables used are: Tax avoidance and the independent
variable is profitability, leverage, and Sales Growth. The amount of data that meets the criteria is as high as 92 Company samples or data ranging from 2020 to
2022.
Table 1. Summary of Variable Operationalization
|
No. |
Variable |
Size |
Scale |
|
Independent |
|||
|
1. |
Profitability |
ROA = |
Ratio |
|
2. |
Leverage |
DER = |
Ratio |
|
3. |
Sales Growth |
Sales
Growth = |
Ratio |
|
Dependent |
|||
|
4. |
Tax Avoidance |
|
Ratio |
Source: Data Processing Results, 2023
Results
and Discussion
Descriptive
Statistical Test
Table 2. Descriptive Statistical
Results
|
|
N |
Minimum |
Maximum |
Mean |
Std.
Deviation |
|
ETR |
92 |
0,022 |
0,707 |
0,242 |
0,093 |
|
ROA |
92 |
0,002 |
0,228 |
0,084 |
0,054 |
|
DER |
92 |
0,109 |
2,904 |
0,807 |
0,580 |
|
GROWTH |
92 |
-0,557 |
1,188 |
0,116 |
0,230 |
Source:
SmartPLS Data Processing Results, 2023
Based on the
results of descriptive statistical tests, conclusions can be drawn, namely, Tax
Avoidance received a minimum value of 0.022 obtained by PT Mayora
Indah Tbk. for the period of 2020 and a maximum value
of 0.707 obtained by PT Pratama Abadi Nusa Industri Tbk. for the period of
2020. Average rating Tax avoidance between 2020-2022 is 0.242 with a standard
deviation of 0.093. Profitability received a minimum value of 0.002 obtained by
PT Pratama Abadi Nusa Industri
Tbk. for the period of 2020 and a maximum value of
0.228 obtained by PT Multi Bintang Indonesia Tbk. for
the period of 2021. Average rating profitability between year 2020-2022 is
0.084 with a standard deviation of 0.054. Leverage received a minimum score of
0.109 obtained by PT Wilmar Cahaya Indonesia Tbk. for the period of 2022 and a maximum value of 2.904
obtained by PT Pratama Abadi Nusa Industri
Tbk. for the period of 2021. Average rating Leverage between
2020-2022 is 0.807 with a standard deviation of 0.580. Sales Growth got a
minimum value of -0.557 obtained by PT Morenzo Abadi
Perkasa Tbk. for the period of 2022 and a maximum
value of 1.188 obtained by PT. Morenzo Abadi Perkasa Tbk. for the period of 2022. Average rating Sales Growth between
2020-2022 is 0.116 with a standard deviation of 0.230.
Test
Outer Model
Convergent
Validity
Outer loading is used to assess the quality of measurement
indicators. The
following is the result of Convergent Validity through Outer Loading.
Table 3. Convergent Validity
Results
|
|
Leverage |
Profitability |
Sales
Growth |
Tax
Avoidance |
Information |
|
DER |
1,000 |
|
|
|
Valid |
|
ETR |
|
|
|
1,000 |
Valid |
|
GROWTH |
|
|
1,000 |
|
Valid |
|
ROA |
|
1,000 |
|
|
Valid |
Source:
SmartPLS Data Processing Results, 2023
Based on Table 3, it can be seen that the
payload value (Loading) and test results convergent validity for variables
profitability, leverage, sales growth and Tax avoidance has met the requirement
of more than 0.7 and can be concluded that all indicators have been valid.
Discriminant
Validity
If
the loading value of other latent factors is higher, then the measurement
variable has high cross-loading and can reduce the validity and reliability of
the model.
Table 4. Cross Loading Results
|
Indicators |
Leverage |
Profitability |
Sales
Growth |
Tax
Avoidance |
INFORMATION |
|
DER |
1,000 |
-0,414 |
0,207 |
0,212 |
Valid |
|
ROA |
-0,414 |
1,000 |
0,096 |
-0,435 |
Valid |
|
GROWTH |
0,207 |
0,096 |
1,000 |
-0,144 |
Valid |
|
ETR |
0,212 |
-0,435 |
-0,144 |
1,000 |
Valid |
Source:
SmartPLS Data Processing Results, 2023
From
the results of Table 4, it can be concluded that the indicator has a higher
correlation compared to other indicators, in other words all discriminant
validity tests state that the indicator is valid. Furthermore,
the test can be carried out Fornell-Larcker Criterion
which is used to evaluate discriminant validity by estimating how far a
construct can be distinguished from other constructs in the model.
Table 5 Fornell-Larcker Criterion Results
|
|
Leverage |
Profitability |
Sales
Growth |
Tax
Avoidance |
|
Leverage |
1,000 |
|
|
|
|
Profitability |
-0,414 |
1,000 |
|
|
|
Sales Growth |
0,207 |
0,096 |
1,000 |
|
|
Tax Avoidance |
0,212 |
-0,435 |
-0,144 |
1,000 |
Source:
SmartPLS Data Processing Results, 2023
Based
on Table 5, it can be seen that the test results discriminant validity Fornell-Larcker Criterion for variables
profitability, leverage, sales growth and tax avoidance, It is known that all
variables have the highest value in each column, so it can be stated valid. Next, the Test is carried out Hetertrait-Monotrait
Ratio (HTMT)
Table 6. Hetertrait-Monotrait
Ratio Results
|
|
Leverage |
Profitability |
Sales
Growth |
Tax
Avoidance |
|
Leverage |
|
|
|
|
|
Profitability |
0,414 |
|
|
|
|
Sales
Growth |
0,207 |
0,096 |
|
|
|
Tax
Avoidance |
0,212 |
0,435 |
0,144 |
|
Source:
SmartPLS Data Processing Results, 2023
Based on Table 4.6, it can be seen that the results of the Heterotrait-Monotrait Ratio test for the variables profitability, leverage, sales growth and tax
avoidance have a Heterotrait-Monotrait Ratio value below
0.90 which shows the validity of a good discrimination and can be declared
valid. Another
way to see the validity of discriminants is through the value of the average
Variance Extracted.
Table 7. Results of Average Variance Extracted
|
|
Average Variance Extracted |
INFORMATION |
|
Leverage |
1,000 |
Valid |
|
Profitability |
1,000 |
Valid |
|
Sales Growth |
1,000 |
Valid |
|
Tax Avoidance |
1,000 |
Valid |
Source:
SmartPLS Data Processing Results, 2023
From Table 7, it is known the test results discriminant
validity AVE for variables profitability, leverage, sales growth and
tax avoidance, It can be concluded that all variables have a value above 0.50,
then it can be stated valid.
Reliability
Test – Composite Reliability & Cronbach's Alpha
Table 8. Composite Reliability
& Cronbach Alpha Results
|
Variable |
Composite
Reliability |
Cronbach
Alpha |
|
Leverage |
1,000 |
1,000 |
|
Profitability |
1,000 |
1,000 |
|
Sales
Growth |
1,000 |
1,000 |
|
Tax
Avoidance |
1,000 |
1,000 |
Source:
SmartPLS Data Processing Results, 2023
From
the table above indicates that the composite
reliability value is above 0.7 and the cronbach alpha
value is above 0.6. So it can be concluded that the data used is consistent and
has good reliability.
Inner
Model Test
After
the model has met the discriminant validity criteria, then testing is carried
out on the structural model (inner model) by taking into account the
coefficient of determination (R2) and path coefficient.
Coefficient
of Determination
Table 9. Test Results of
Coefficient of Determination
|
|
R
Square |
R
Square Adjusted |
|
Tax
Avoidance |
0,204 |
0,177 |
Source:
SmartPLS Data Processing Results, 2023
Based on the table above, it indicates that
the analysis of the correlation coefficient (R) of 0.204 is lower than 0.5, so
the conclusion of the relationship between independent variables can be drawn profitability, leverage and Sales Growth with
dependent variables Tax avoidance has a weak
relationship. While R Square Adjusted Dependent variable Tax avoidance (ETR) is described by an independent
variable profitability, leverage and Sales Growth 17.7%
and the remaining 82.3% were explained by other variables not included in the
study.
F-Square
Table 10. F-Square Results
|
|
Leverage |
Profitability |
Sales
Growth |
Tax
Avoidance |
|
Leverage |
|
|
|
0,003 |
|
Profitability |
|
|
|
0,149 |
|
Sales
Growth |
|
|
|
0,082 |
|
Tax
Avoidance |
|
|
|
|
Source:
SmartPLS Data Processing Results, 2023
Based
on Table 10 can be seen Leverage has value F-Square less than 0.02, so the influence Leverage
towards Tax Avoidance including
small, while the capability construct Profitability and Sales Growth has value
F-Square more than 0.02 and less than 0.15 so that both
constructs have a moderate influence on Tax
Avoidance.
Path
Coefficients
Path
coefficients are used to determine the significance and strength of
relationships between variables and test related hypotheses.
Table 11. Path Coefficients Results
|
Variable |
Tax
Avoidance |
|
Leverage |
0,074 |
|
Profitability |
-0,392 |
|
Sales Growth |
-0,122 |
Source:
SmartPLS Data Processing Results, 2023
From
the table above, it can be concluded that profitability, leverage and Sales
Growth does not have much influence on tax avoidance. Based on the attached
data, it can also be concluded that Leverage positive effect on tax avoidance, while
profitability and Sales Growth negatively affect Tax avoidance.
Multicollinearity
Test
Before testing the
hypothesis, it is necessary to test to determine the existence of multicollinear
between variables or not through the statistical measure of inner VIF. Below is
a table of the results of Inner VIF Values.
Table 12. Results of Inner VIF
Values
|
|
Leverage |
Profitability |
Sales
Growth |
Tax
Avoidance |
|
Leverage |
|
|
|
1,303 |
|
Profitability |
|
|
|
1,259 |
|
Sales
Growth |
|
|
|
1,090 |
|
Tax
Avoidance |
|
|
|
|
Source:
SmartPLS Data Processing Results, 2023
Based on the VIF
values in Table 12, it can be seen that all VIF values < 5 can be concluded
if the data is not high multicollinear.
Discussion
Based
on the test results, a conclusion can be drawn that profitability has a
significant negative influence on tax avoidance. Because profitable companies
can manage their income and tax liabilities efficiently so that they do not
engage in tax avoidance. Leverage does not have a significant effect on tax
avoidance. Increasing the leverage ratio, will increase the amount of money the
company uses from third-party debt and interest costs related to the debt which
will have the effect of decreasing a company's tax burden and not make the
company finance with large debts. Sales growth does not have a significant
effect on tax avoidance (Maryanti & Biduri, 2022). A company with a
high rate of increase in sales does not necessarily obtain high profits. This
may occur due to increased expenses or costs due to increased sales so that
high sales growth can result in low profits. So that high and low sales growth
does not have a significant effect on tax avoidance.
Conclusion
There are several limitations that need
development and must be considered, namely: (a) This study only uses three
independent variables while there are
still other variables that may affect tax avoidance and are not used, (b) This
study has a small adjusted R Square
value (18%), which there are other
variables that may explain more about the dependent variable in this
study, (c) This research was conducted
in a limited period, namely for the period 2020-2022, (d) This research only
uses companies engaged in food and beverages. Based on the limitations they have, there are recommendations that
can be suggested, namely (a) Researchers are then expected to be able to
transform data such as increasing research years, (b) Researchers are then
expected to increase the number of other independent variables to examine the
effect of variables on tax avoidance, (c) Researchers are then expected to add
independent variables that have an influence on tax avoidance, (d) Researchers
are then expected to use a longer research period so that the results of the
study can represent the generalized population.
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Copyright holder: Caroline
Christie Sanjaya, Yuniarwati (2024) |
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First publication right: Syntax Literate: Jurnal Ilmiah Indonesia |
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