FACTORS AFFECTING TAX AVOIDANCE IN INDONESIA AND SINGAPORE PRACTICES: A VIEW FROM AGENCY THEORY

  • Putra P
  • Zainal A
  • Thohiri R
  • et al.
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Abstract

Extant studies highlight that an act of illegally tax planning by the tax manager in companies is due to the information asymmetry allowing managers to hide actual information in seeking substantial compensation from the profit gained by companies for his/her own benefit. The main objective of the research is to investigate the tax avoidance model from two neighbor countries: Indonesia and Singapore, that have a different weight of Effective Tax Rate (ETR) reflecting an agency theory perspective in the tax avoidance practice. The multiple regression test in analyzing the influence of capital intensity, leverage, institutional ownership, compensation for fiscal losses, and firm size on tax avoidance was applied to 90 and 82 public listed manufacturing companies in Indonesia and Singapore, respectively. Analysis of the data used is quantitative using secondary data. More specifically, the result of the study indicates that capital intensity, leverage, and tax incentive are established as three important factors affecting tax avoidance in Indonesia. As for Singapore practice, except for firm size, none of the mentioned variables found as major determinants of tax avoidance in Singapore. The implications of this study provide information for shareholders and the government to further look performance and value of the company(s) in relation to the tax planning related-activities.

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APA

Putra, P. D., Zainal, A., Thohiri, R., & Harahap, K. (2019). FACTORS AFFECTING TAX AVOIDANCE IN INDONESIA AND SINGAPORE PRACTICES: A VIEW FROM AGENCY THEORY. Labuan Bulletin of International Business and Finance (LBIBF), 17(2), 24–40. https://doi.org/10.51200/lbibf.v17i2.2537

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