Does Corporate Governance Support Tax Avoidance Practice in Indonesia?
Abstract
Tax avoidance is an action taken by company management so that corporate tax payments are smaller than they should be. The practice of tax avoidance often occurs in companies in Indonesia related to the tax rate for business entities which is considered too high. This study was conducted to establish if the factors of corporate governance, sales growth and leverage have an impact on the practice of tax avoidance. Corporate governance in this study is divided into five, namely independent board of commissioners, institutional ownership, managerial ownership, audit committee, and audit quality. The sample in this study is mining companies listed on the Indonesia Stock Exchange. The method used to take the sample was purposive sampling. This study used multiple linear regression. The results showed that independent board of commissioners, institutional ownership, audit quality, sales growth, and leverage had no effect on tax avoidance, whereas managerial ownership and audit committee had a positive effect on tax avoidance. This shows the impasse of corporate governance in preventing tax avoidance and even the audit committee actually encourages tax avoidance. The implication of this research is that it is very important to have strict supervision of mining companies in Indonesia in respect of tax avoidance practices by relevant agencies such as the tax office so that it has an impact on the need for technical skills for tax officers to detect tax evasion by companies.
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