Analysis of Factors Affecting Tax Aggressiveness in Manufacturing Companies in Indonesia

Abstract

This study aims to empirically examine the influence of profitability, capital intensity, company size, liquidity, and leverage on tax aggressiveness in manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2022. The sample includes 181 companies selected annually from a population of 209 manufacturing firms that published financial or annual reports on the IDX website during the study period. Data were extracted from these financial statements using Microsoft Excel and analyzed using E-views 10. The results indicate that profitability and leverage significantly influence tax aggressiveness, with higher profitability leading to increased tax aggressiveness, while higher leverage results in reduced tax aggressiveness. On the other hand, capital intensity, company size, and liquidity were found to have no significant effect on tax aggressiveness. These findings suggest that firms with higher profits are more inclined to engage in tax planning strategies to minimize tax liabilities, whereas firms with higher debt levels may be constrained in their ability to do so due to the associated costs and risks. In conclusion, the study provides valuable insights for policymakers and stakeholders in understanding the factors that drive tax aggressiveness in the manufacturing sector. The results highlight the need for more stringent regulations and oversight, particularly for highly profitable companies, to curb aggressive tax planning practices.