Do Corporate Social Responsibility and Corporate Governance Affect Tax Aggressiveness? Evidence from Indonesia

Abstract

For businesses in Indonesia, corporate social responsibility (CSR) is still seen as an additional burden that will incriminate the company. Based on the observations of two companies that received awards for the CSR programs, it seems that the company always received a Tax Underpayment Assessment Letter (SKPB) from the Directorate General of Taxes for the period 2014-2017. This suggests that the burden of CSR incurred by the company exceeds the limits set out in the provisions of Minister of Finance Regulation Number (2011). The indications that arise for these conditions are the efforts made by the company to practice tax avoidance by posting CSR expenses above the applicable provisions with the aim of reducing corporate's income taxes. But the aggressive tax planning measures should be minimized by implementation of good corporate governance (GCG). This study aims to examine the effect of CSR and corporate governance (CG) on corporate tax aggressiveness and the effect of CSR on tax aggressiveness which is moderated by corporate governance. The objects of the research are the financial statements of public companies listed on the Indonesia Stock Exchange (IDX) with the observation period of 2014-2017. The data are analysed using multiple linear regression. The test results show that CSR has a positive effect on tax aggressiveness, however corporate governance does not affect tax aggressiveness. Furthermore, corporate governance has no effect in moderating the effect of CSR on tax aggressiveness.

Corporate Governance Characteristics and Firm Value of Deposit Money Banks in Nigeria

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“…The major aim of good corporate governance is to ensure the efficient use of resources to reduce corporate fraud and mismanagement maximise shareholders' wealth and align the conflicting interests of all stakeholders (Yimbila, 2017). Hasibuan and Khomsiyah (2019) state that good corporate governance reduces agency problems and increases corporate performance. Firm value is a very important component employed to evaluate the performance of managers in any given business entity.…”

Corporate Governance Attributes and Tax Planning of Listed Pharmaceutical Companies in Nigeria

“…The major aim of good corporate governance is to ensure the efficient use of resources to reduce corporate fraud and mismanagement with the purpose of maximising shareholders wealth and aligning the conflicting interests of all stakeholders (Yimbila, 2017). Hasibuan and Khomsiyah (2019) noted that the good corporation governance reduces agency problems and improve corporate performance. Ying (2015) noted that previous studies have documented that a good corporate governance system serves as an effective mechanism in the mitigation of opportunistic behaviour of management; effectively alleviate agency problems mostly the agency conflicts between managers and owners; protect shareholders and ensure that investors are given a fair return on their investments (Nafti,et al, 2020;Belz, Hagen, & Steffens, 2019;Chytis, et al 2019;Mappadang, 2019;Ogbeide, & Obaretin, 2018;Mais, & Patminigih, 2017).…”

“…According to Chytis, et al (2019), corporate governance is all about the relationship between the owners and managers in directing and controlling companies as separate entities. Onyema and Major (2021), Hasibuan and Khomsiyah (2019); Ogbeide and Obaretin (2018) state that corporate governance is a system of directing and controlling corporate entities, be they in the private sector, public sector or be they financial institutions to fulfill longterm strategic goals, taking care of the welfare of their employees and the local community, maintaining harmonious relations with their suppliers and customers and work in compliance with the legal framework that exists in the country and use such processes of production that generate minimum externalities of the negative kind of the nation as a whole (Yuniarsih, 2018;Waluyo, 2017). It provides the mechanisms, processes and structures by which management ensures that resources are effectively and efficiently managed to achieve desired results by the owners (Salawu & Adedeji, 2017;Uchendu et al, 2016).…”

“…The major aim of good corporate governance is to ensure the efficient use of resources to reduce corporate fraud and mismanagement with the purpose of maximising shareholders wealth and aligning the conflicting interests of all stakeholders (Yimbila, 2017). Hasibuan and Khomsiyah (2019) noted that the good corporation governance reduces agency problems and improve corporate performance. The study of Irawan and Farahmita (2013) revealed that good corporate governance affects the tax aggressiveness of companies.…”