COVID-19 and corporate tax avoidance: International evidence

A, Athira; Ramesh, Vishnu K.

doi:10.1016/j.ibusrev.2023.102143

Cited by 12 publications

(5 citation statements)

References 110 publications

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“…Second, the decrease in revenue and tax rates during the COVID-19 pandemic results in lower marginal tax rates, providing diminishing incentives not to report income. Additionally, concerns about reputational damage may also influence executive management decisions to avoid tax avoidance during the crisis period (Athira & Ramesh, 2023) as it can impact a decrease in the company's value, reduce customer trust, and even lead to legal claims (Wang et al, 2021).…”

Section: Discussionmentioning

confidence: 99%

“…Such relaxation of law enforcement is evidenced by the audit coverage ratio reported by the Directorate General of Taxes dropping to 0.86% in 2021 from 1.54% the previous year (DGT, 2022). Several studies conducted by (Faisal & Rosid, 2022), (Athira & Ramesh, 2023), and (Khan & Nawaz, 2023) indicates that tax avoidance behavior has increased during the COVID-19 pandemic.…”

Section: The Covid-19 Pandemic Crisismentioning

confidence: 99%

“…Companies known for aggressive tax avoidance practices may experience reputational harm and loss of trust from stakeholders (Athira & Ramesh, 2023). This can have an impact on decreasing share value, decreasing customer trust, and can even lead to lawsuits or sanctions from regulators (Wang et al, 2021).…”

Section: The Covid-19 Pandemic Crisismentioning

confidence: 99%

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Do Tax Rates Encourage Profit Shifts By Multinational Companies In Indonesia?

Setiawan

2024

Ecombis. Rev. J. Ilm. Eco. and Bussines.

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Due to the COVID-19 pandemic, many companies have experienced a decline in financial performance which has the potential to cause financial difficulties. While the government has provided stimulus to help, there are concerns about increasing tax avoidance efforts and profit-shifting practices with businesses transitioning to digital models. However, there is a view that companies may prefer ethical behavior to safeguard their reputation in the midst of a crisis. This study analyses profit-shifting behaviour by multinational companies in Indonesia before and during the COVID-19 pandemic, focusing primarily on the effect of differences in Indonesia's income tax rates on average rates in countries where the group of companies operates. Descriptive analysis is used in this study to provide an overview and general information about the data obtained in the field which is a research variable and will be used as analysis material to answer research questions. The research sample involved 163 companies listed on the Indonesia Stock Exchange and met certain criteria, such as the calculation of corporate income tax according to the Income Tax Law and the exclusion of certain sectors. Data was analyzed for the period 2017-2022, covering the period before and during the COVID-19 pandemic, as well as changes in tax rates in Indonesia. The results show that the difference in Indonesia's corporate income tax rate with the average tax rate in the country where multinational companies operate has a negative and significant effect on profit before tax.

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Section: Discussionmentioning

confidence: 99%

Section: The Covid-19 Pandemic Crisismentioning

confidence: 99%

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Do Tax Rates Encourage Profit Shifts By Multinational Companies In Indonesia?

Setiawan

2024

Ecombis. Rev. J. Ilm. Eco. and Bussines.

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“…Governments worldwide began to carry out tax reforms after the Global Financial Crisis (GFC) in 2007-2009 to minimize tax avoidance (Athira & Ramesh, 2023). Corporate tax avoidance has increased since 2000 and has had a negative impact on economic development and society in general, so it can be said that tax avoidance practices are as important as environmental issues, in this case, interpreted as a form of corporate social responsibility reporting (Lin et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

Corporate Social Responsibility and Tax Avoidance: Do Socially Responsible Firms in Indonesia Pay More Taxes

Ermayda,

Purnamasari,

Narullia

2023

JEFMS

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The practice of tax avoidance in companies has increased since 2000, and has harmed the country's economic development. Tax avoidance is as vital as environmental issues, in this case it is interpreted as a form of Corporate Social Responsibility (CSR) report. This research tries to analyze environmental, social, and governance performance that influences tax avoidance activities in companies, with a sample of 86 companies listed on the Indonesia Stock Exchange in the past 10-year period, namely 2013-2022. The research method used is quantitative, using data obtained from financial reports, annual reports, and other quantitative data through the Refinitiv Eikon database. The data analysis technique used is panel regression using the Eviews 9.0 application. The research results show that the level of CSR reporting based on ESG performance has a negative effect on tax avoidance practices. A low level of CSR reporting actually indicates high tax avoidance, meaning that CSR disclosure or reporting is only a formality for compliance with policy, but the level of tax avoidance is actually quite high. This is a form of action from the company to maximize the gaps that exist in tax laws and regulations in Indonesia. This research also shows that CSR disclosure is reflected in ESG performance, so it is necessary to expand other variables over a certain time span. Further research can also be carried out using other methods, with the hope that the research results can make a positive contribution to both stakeholders and the company.

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“…Achieving a delicate equilibrium between prudent tax planning and ethical financial reporting is imperative, given that an excessive coupling of tax avoidance and earnings management can result in reputational damage, legal entanglements, and the erosion of stakeholder trust. Non-compliance of corporate taxpayers, stemming from disparities in interpretation between tax authorities and companies as posited by agency theory, serves as a catalyst for engaging in tax avoidance (Athira & Ramesh, 2023). The impact of tax avoidance on earnings management is observable as companies may bolster accounting profits through manipulative practices, subsequently elevating tax expenses.…”

mentioning

confidence: 99%

A Literature Review: Tax Planning and Avoidance in Earnings Management

Intan Kumala Ratu,

Agrianti Komalasari,

Liza Alvia

2023

IJSMR

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This study aims to give a comprehensive analysis of the intricate relationship between tax planning, tax avoidance, and earnings management in the context of corporate financial practices. Through an extensive literature review, the research elucidates the multifaceted implications of these practices on financial reporting, corporate governance, and adherence to international tax regulations. The findings reveal that legal tax planning, when aligned with strategies to reduce taxable income, can positively impact reported earnings. However, the transformation of tax planning into a tool for earnings management raises ethical and transparency concerns, leading to global regulatory scrutiny. The study also investigates the nuanced impact of a declining tax rate on companies' strategies for managing earnings, emphasizing the need for careful consideration and ethical financial practices. Future research directions are proposed, highlighting the importance of empirical investigations across diverse industries and regions to deepen our understanding of the intricate relationship between tax practices and earnings management. The findings contribute valuable insights for stakeholders, practitioners, and policymakers

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COVID-19 and corporate tax avoidance: International evidence

Cited by 12 publications

References 110 publications

Do Tax Rates Encourage Profit Shifts By Multinational Companies In Indonesia?

Do Tax Rates Encourage Profit Shifts By Multinational Companies In Indonesia?

Corporate Social Responsibility and Tax Avoidance: Do Socially Responsible Firms in Indonesia Pay More Taxes

A Literature Review: Tax Planning and Avoidance in Earnings Management

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