The effect of XBRL adoption on corporate tax avoidance: empirical evidence from an emerging country

Abstract

Purpose This paper aims to study the impact of the adoption of eXtensible Business Reporting Language (XBRL) on corporate tax avoidance. Design/methodology/approach This paper used a quantitative method with panel data regression models using a sample of firms listed on the Indonesia Stock Exchange from 2011 to 2018. Findings The regression results demonstrate that XBRL implementation does not have any impact on corporate tax avoidance. The results indicate that tax avoidance is not reduced following XBRL adoption. This report shows unexpected and unfavourable outcomes of XBRL financial reporting in a developing country. Research limitations/implications This study employs a sample of firms from one emerging country only. Practical implications The study proposes several implications for using XBRL in tax reporting, which may help the tax authorities reduce tax avoidance. Regulators need to develop adequate taxonomies with standardized extensions related to tax information in the XBRL format. They include tax tags from financial statements and tax tags from the disclosure section, to gain more comprehensive corporate tax information. Originality/value This study proposes and tests an explanation for the effect of XBRL adoption on corporate tax avoidance in the context of a developing country.

The impact of managerial ability on corporate tax risk and long-run tax avoidance: empirical evidence from a developing country

“…This study also has several implications for developing-country tax authorities and policymakers. Our results can be viewed as an early warning from the tax authority's perspective since greater tax avoidance should be associated with greater tax risk (not smaller tax risk) (Saragih and Ali, 2022a;Saragih and Ali, 2022b). Firstly, the tax authorities must be more professional in carrying out their primary duties and functions.…”

Penurunan Tarif PPh Badan Sebagai Ketidakpastian Eksternal dan Tax Avoidance

“…Mengikuti Lanis et al ( 2019) dan Akbari et al (2018), BTD pada penelitian ini dihitung dengan menyelisihkan pendapatan bersih perusahaan sebelum pajak dengan penghasilan kena pajak yang kemudian dibagi dengan total aset perusahaan. Penghasilan kena pajak dihitung dengan membagi beban pajak dengan tarif pajak berdasarkan undang-undang (Akbari et al, 2018;Brune et al, 2019;Gaaya et al, 2017;Lee & Bose, 2021;Saragih & Ali, 2022;Zeng, 2019). Hasil akan menunjukan apabila semakin tinggi nilai BTD maka mengindikasikan semakin tingginya keterlibatan perusahaan dalam praktik penghindaran pajak (Wilson, 2009).…”