Determinants of Tax Avoidance: Evidence from Indonesian Listed Companies

Abstract

Abstract

Tax avoidance is an effort to minimize the tax paid to remain within the frame of taxation provisions—methods and
techniques performed by exploiting weaknesses in tax laws and regulations. Thin capitalization, profitability, and
operating cash flow have opportunities to conduct tax avoidance practices to minimize the tax burden that
companies should pay. The purpose of this study was to test and obtain empirical evidence of the influence of
independent variables on dependent variables in food and beverage sub-sector manufacturing companies listed on
the Indonesia stock exchange in 2015-2019. This quantitative analysis uses purposive sampling techniques with a
total of nine samples of food and beverage sub-sector manufacturing companies listed in IDX. The results showed
that based on the results of thin capitalization testing does not affect tax avoidance. Profitability affects tax
avoidance. Operating Cash Flow affects tax avoidance. The results of this study are expected to be used as a
reference to the performance of companies, especially food and beverage sub-sector companies, to be more careful
in making decisions on tax avoidance practices that will impact the company's reputation.

Keywords
Operating Cash Flow, Profitability, Tax Avoidance, and Thin Capitalization.