Political Connections and Tax Avoidance in Indonesia

Abstract

This study aims to provide empirical evidence on the effect of political connections on tax avoidance practices, as well as the effect of electoral year moderation on the effect of political connections on tax avoidance practices of companies listed on the Indonesia Stock Exchange between 2013 and 2019. The results of the analysis of 108 samples show that the political connections of the board of commissioners have a negative insignificant effect on tax avoidance. The electoral year cannot moderate, strengthen, or weaken the influence of the board of commissioners' political ties to tax avoidance. Furthermore, this study also discovers a significant negative effect of the board of commissioners' political connections on tax avoidance in companies with a high level of leverage.