Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 The Influence of Investment Decisions and Corporate Financial Performance on Tax Avoidance: A Cross-country Study Salsabila Salsabila1.
Yossi Diantimala2* Department of Accounting.
Faculty of Economics and Business.
Universitas Syiah Kuala.
Indonesia *Corresponding author: ydiantimala@unsyiah.
https://dx.
org/10.
24815/JDAB.
V10I1.
ARTICLE INFO
ABSTRACT
Article history:
This study investigates the influence of investment decisions and corporate financial performance on tax avoidance.
We employed mining companies listed on the Asia Pacific Stock Exchanges from 2017 to 2021.
The purposive sampling technique was applied to select 40 out of 97 top Australian.
Indian, and Indonesian mining companies .
firm-year To test the hypotheses, the data was then analyzed comparatively using multiple linear regression analysis.
The results show that investment decisions and corporate financial performance simultaneously affect tax avoidance.
Partially, investment decisions has a significantly positive effect on tax avoidance, and corporate financial performance also has a significantly positive effect on tax avoidance.
The results suggest that investment decisions and firm performance motivate managers to tax avoidance.
Received date: 11 January 2023 Received in revised form: 16 February 2023 Accepted: 16 February 2023 Available online: 23 February 2023 Keywords:
Financial performance, investment decisions, mining companies, tax avoidance Citation:
Salsabila.
Diantimala.
, .
The Influence of Investment Decisions and Corporate Financial Performance on Tax Avoidance: A Cross-country Study.
Jurnal Dinamika Akuntansi dan Bisnis, 10 .
, 61 Ae 80 Kata Kunci:
Kinerja keuangan, keputusan investasi, perusahaan pertambangan, penghindaran pajak
Pengaruh Keputusan Investasi dan Kinerja Keuangan Perusahaan Terhadap Penghindaran Pajak: Sebuah Studi Lintas Negara
ABSTRAK
Penelitian ini bertujuan untuk menguji pengaruh keputusan investasi dan kinerja keuangan perusahaan terhadap penghindaran pajak.
Perusahaan yang menjadi populasi penelitian adalah perusahaan pertambangan yang terdaftar di Bursa Efek Asia Pasifik dari tahun 2017 hingga 2021.
Sampel diambil dengan menggunakan teknik purposive yang menghasilkan 40 dari 97 perusahaan pertambangan di Australia.
India, dan Indonesia .
Untuk menguji hipotesis, data kemudian dianalisis secara komparatif dengan menggunakan analisis regresi linier berganda.
Hasil penelitian menunjukkan bahwa keputusan investasi dan kinerja keuangan perusahaan secara simultan berpengaruh terhadap penghindaran pajak.
Secara parsial, keputusan investasi berpengaruh positif signifikan terhadap penghindaran pajak, dan kinerja keuangan perusahaan juga berpengaruh positif signifikan terhadap penghindaran pajak.
Hasil penelitian ini menggambarkan bahwa keputusan investasi dan kinerja perusahaan dapat memotivasi manajer untuk melakukan penghindaran pajak.
Introduction A recent survey conducted by the Asian Development Bank in 2021 indicates that emerging nations in Asia and the Pacific require $1.
5 trillion annually to address various societal issues (Asian Development Bank, 2.
However, average tax returns in emerging Asian countries remain low and do not represent the region's rapidly growing One of the most severe concerns affecting governments in this field is tax avoidance (Asian Development Bank, 2.
The other survey held by OECD estimates that several AsiaAePacific countries suffer tax losses reaching $240 every year due to tax avoidance activities (Asian Development Bank.
Tax avoidance has evolved into a sophisticated and aggressive approach that is difficult to detect and requires much money for a government to expose.
Nevertheless, the numerous tax disputes in the Asia Pacific do not exclude mining corporations from partaking.
Indonesian Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 National Anti-Corruption Commission (KPK) lost year after year.
Along with its function in the considers the mining industry prone to corruption, energy sector, coal contributes to national including tax evasion.
The National Anti-Corruption development by providing a source of cash for the Commission (KPK) has detected an Rp15.
9 trillion state budget (Arinaldo & Adiatama, 2.
annual deficit in mining tax payments in forest areas World mining congress conducted in 2018 (DDTC News, 2.
deduced eight countries as the biggest miners in the The mining sector, which includes coal mining, world (Statista, 2.
Within Asia Pacific receives much attention.
The coal mining industry in Countries, there are China.
Australia.
India, and the Asia Pacific was recently attacked by plenty of Indonesia, with the number of extractions of mining unfavorable difficulties in several nations.
The products 4,084.
n a million metric ton.
, 1,196.
documentary sexy killers from Indonesia, which .
n a million metric ton.
, 1,014.
n a million reveals various losses from the coal industry, reports metric ton.
, and 668 .
n a million metric ton.
This on indications of Global Witness' tax avoidance study selected Australia.
Indonesia, and India as the against one of Indonesia's major coal players, sample countries.
China is also one of the biggest support for the repeal of the domestic market miners, but it is not selected due to the lack of obligation regulation, and a variety of other issues language understanding.
These phenomena describe (DDTC News, 2.
Moreover, the Indonesian that tax avoidance has become a significant issue and non-tax state revenues arrears in the mining and coal has received great attention over the past few years.
industry reached IDR 25.
5 trillion in 2017.
This Tax avoidance cases generated a lot of negative depicts the amount of potential state income that is responses from various parties (Dang et al.
, 2.
Table 1 Tax revenue comparison .
Year Australia Tax Target Tax Revenue .
illion Dollar.
Dollar.
Indonesia Tax Target Tax Revenue (Trillion (Trillion Rupiah.
Rupiah.
Tax Target Rupee.
1,450,900 1,424,000 1,577,600 1,198,820 1,227,014 1,480,649 1,705,046 1,635,909 1,343,530 1,136,670
1,332,060
1,069,980
India Tax Revenue .
Rupee.
1,242,488 1,317,211 1,356,903 1,426,121 Accessed from: Australian government taxation office.
Indonesian Ministry of Finance.
Union budget ministry of finance India Table 1 indicates that the income generated by the tax sector that the state should receive each year is not equivalent to the payments made by taxpayers.
Most of the degree of compliance among those three countries' taxpayers is still below the target, as seen by the disparity between tax collection targets and revenue realization.
This demonstrates that various elements impact taxpayers' decisions to avoid paying Therefore, the company will adopt a strategic stance toward tax planning, putting it in a position to pursue various viable courses of action.
The position taken by the firm reflects its awareness of the legitimacy of incorporation and the possibility that tax authorities would question it later, perhaps resulting in a refund, fine, or court lawsuit.
Tax planning refers to a business's capacity to plan and manage its tax affairs in order to lawfully lower taxes (Cooper & Nguyen, 2.
The primary goal of tax planning is to identify numerous loopholes .
in the tax system so that businesses can pay the least amount of tax possible.
Because the tax authorities cannot intervene, a management engages in tax avoidance operations by utilizing loopholes in the legislation.
Therefore, based on the tax revenue data, managers can practice tax avoidance by Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 exploiting loopholes in new tax legislation and tax incentives (Barid & Wulandari, 2.
Meagering capitalization is one strategy for evading taxes (Lietz, 2.
It refers to using more debt than equity as a source of fundraising (OECD.
The interest expenditure on the loan might lower taxable income and increase the value of a corporation (Modigliani & Miller, 1.
As the result, the taxable profit will decrease because fiscally the taxpayer has incurred a loss.
The loan will later be used to increase the investment for a The company started investing by acquiring fixed assets.
Avram et al.
describe investment as current expenditure for future A firm may invest in several ways, one of which is through investing in fixed assets.
Because it has a valuable life in the future, the structure of fixed assets is a factor that influences crucial finance and investment decisions.
Due to long-term utilization, the value of fixed assets declines with This phenomenon is known as depreciation.
According to the taxes rule, depreciation on expenses for acquiring physical assets and other charges with a useful life of more than one year can be deducted when computing taxable income.
Evana .
argues that asset investment, which is also a decision made by a company, has an impact on tax The asset mix also allows for implementing tax avoidance strategies.
Because tax rules evaluate each capital structure strategy and asset mix owned by the firm differently, the existence or lack of tax avoidance can be influenced by the investment decision (Ngelo et al.
, 2.
In business, financial performance represents the firmAos genuine state of health (Amellya, 2.
Through financial statements, users of financial statements may comprehend a company's financial performance and estimate the company's longevity.
In addition, businesses must effectively manage their tax responsibilities so that they do not significantly hinder their operations.
For businesses, taxes are a penalty that will limit earnings, whereas information about profits gives viewers of financial statements with an overview of the corporate financial performance and prospects.
The financial performance demonstrates management capacity to utilize corporate resources to generate the firm value and shareholders wellbeing.
To accomplish these objectives, management must work diligently to follow the owner's Tan & Wang .
and Gaur & Kesavan .
define firm financial performance as the productivity, efficiency, and effectiveness of optimal utilization of company resources and earnings by management.
Higher performance demonstrated the efficient utilization of firm resources to serve the financial shareholdersAo interests (Haniffa & Hudaib, 2.
Arinda & Dwimulyani .
argue that financial performance positively affects tax avoidance.
It is because profitability is another factor that might encourage firms to avoid paying taxes.
A firm with a large profit margin also has a high tax burden.
Companies try to limit tax payments to the state by planning tax payments through tax evasion.
(Subagiastra et al.
, 2.
Studies on investment decisions, financial performance, and tax avoidance show mixed results.
A study by Silalahi et al.
reveals that in certain industries like property & real estate companies listed on the Indonesia Stock Exchange, the investment decision factor partially does not influence tax avoidance.
This industry prioritizes inventory over fixed assets in the normal operations of its companies.
This finding is in line with Evana .
, who find that investment in fixed assets has no impact on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange.
However, the findings of Ha & Feng .
successfully show that investment decisions have a positive significant effect on tax avoidance.
Furthermore.
Silalahi et al.
reveal a positive significant effect of financial performance on tax avoidance of property & real estate companies listed on the Indonesia Stock Exchange.
This finding is in line with several results, from Arinda & Dwimulyani .
Pratiwi .
, and Maidina & Wati .
Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 However, the research by Kusufiyah & Anggraini .
confirms no significant effect between the company's financial performance and tax avoidance.
This result is aligned with the findings of several researchers, namely Wiratmoko .
and Supriyanto .
Due to the discrepancy of the prior findings, we argue that it is necessary to re-examine the factors that influence tax avoidance activities.
Research variables include investment decisions and corporate financial performance.
Another rationale for the inclusion of these factors is that they are rarely mentioned in combination with one another when determining tax avoidance.
Based on the argument, this study examines whether investment decisions and corporate financial performance simultaneously and partially affect tax avoidance of mining companies listed on the Asia Pacific Stock Exchanges.
This study contributes to enhancing the literature on positive accounting theory regarding the impact of investment decisions and financial performance on tax avoidance.
This research may serve as reference material for further research related to the topic.
For the researcher, this writing is helpful to add more insight and knowledge regarding tax avoidance practices.
The practical use of this research may give scientific data that can help financial statement readers understand the consequences of investment decisions and financial performance on tax avoidance practices.
Therefore, it is utilized as an investment consideration in a Meanwhile, the contribution of this research practice is intended to give feedback and ideas regarding tax avoidance to businesses and serve as a guideline for business owners, regulators, and investors when making decisions.
Literature Agency theory Ross .
introduces the agency theory in terms of the principal's dilemma, explaining that the agency's economic theory is the selection of compensation schemes that would cause an agent to demonstrate conduct in a contractual agreement between agent and principal under the principal's As a result.
Jensen.
, & Meckling .
develop the concept further.
According to Jensen.
, & Meckling .
, the existence of agency relations is caused by shareholders acting as principals and managers acting as agents to run enterprises when the shareholders and managers have the same goal of maximizing their welfare.
The hypothesis proposes that if both parties are interested in maximizing their utility, the agent would avoid operating in the principals' best interests.
This idea then claim that shareholders and management would have a conflict of interest.
Tax is one of the sources of state revenue.
As a source of state revenue, the government stipulates taxes as an obligation for individuals or companies, whether regionally or nationally.
In executing tax collection, the government and taxpayers have distinct objectives.
The government intends to maintain generating state tax revenues to support government administration.
therefore, if taxpayers pay less tax than they ought to, the state tax sector revenue will decline.
While in companies perspective, tax is one of the costs that must be incurred like other costs because paying taxes will reduce income or net profit (Dharma & Ardiana.
The difficulty that occurs in a widely held corporation due to the separation of ownership and control is highlighted by Slemrod .
Furthermore, according to Hanlon & Heitzman .
, the interactions between shareholders, management, and the government might pose agency concerns in tax avoidance.
As a result, this study has two opposing opinions among shareholders, tax authorities .
he governmen.
, and To obtain the benefits of pay and bonuses, a manager has an opportunity to tax The management is tempted to reduce tax costs and increase income after tax (Armstrong et al.
Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Investment decision The investment decision is one of the decisions that financial management must take to allocate existing cash to generate future profits.
According to Silalahi et al.
, investment come from inside and outside the organization.
Cash, marketable securities, accounts receivable, inventory, and other short-term assets are examples of investments made within the firm.
This investment is included in the current assets on the balance sheet.
Equipment, land, buildings, machinery, cars, and other long-term assets are examples of investments made outside the On the balance sheet, this investment is listed as fixed assets.
The expectations of investors on their wealth, the cost of the asset, the investor capacity to finance the investment, and how to finance it are essential elements for managers to decide whether the companies invest in fixed assets (Harcourt et al.
Virlics, 2.
According to Ha & Feng .
, when monitoring systems are poor, managers tend to invest more than is best for the business for personal benefit at shareholders' expense, built upon Jensen's free cash flow theory.
Therefore, the company would anticipate cash gained through tax avoidance to be utilized inefficiently without adequate monitoring, which is consistent with the free cash flow concept.
That is why Investment decisions are risky.
As a result, it is crucial to undertake a feasibility and investment study to reduce the risk of failure and loss while maximizing the return.
One of the various investment options available to the corporation is investing in fixed assets.
As it has a useful future life, the structure of a fixed assets impacts crucial finance and investment decisions.
According to the tax legislation, the useful life of tangible asset depreciation and other charges is more than one year.
Its depreciation can be deducted for determining taxable income (Evana, 2.
Corporate financial performance According to Arinda & Dwimulyani .
, corporate financial performance is measured by profitability which is a measurement of internal performance used by firms to manage corporate assets and can be determined by the company's The level of profit may be assessed using the company's financial statements.
In other words, profitability is a measurement of management performance in managing the company's resources to maximize shareholdersAo wealth (Ardi Murdoko Sudarmadji, 2.
This ratio assesses the total efficacy of management, which is demonstrated by the proportion of profit to sales and If the profitability ratio is high, it indicates managementAos efficient operation.
The higher profit led to an improvement in the company's Return on Assets (ROA) is used as a proxy for profitability in this study.
This ratio analysis is already a standard method employed by business executives to evaluate the efficiency of the company's overall operations.
Return on Assets (ROA) is a more accurate indicator of a company's profitability since it demonstrates how well management uses its assets to produce profits.
The greater a company's Return on Asset (ROA) number, the better its performance.
It is considered that companies with solid performance and the ability to make profits do not engage in tax avoidance since they can control their income and tax payments.
This is reinforced by stakeholder theory, which states that a firm functions not only to maximize its profit but also to deliver advantages to all stakeholders, which in this case is the government.
The management considers this stakeholder group to share information in corporate reports.
This theory is consistent with the findings of Wijayani .
, who discovered that profitability has a negative influence on tax avoidance.
A strong profitability influence its tax planning in order to create optimal taxes, hence reducing the likelihood of tax avoidance (Hanum & Zulaikha, 2.
Tax avoidance Tax avoidance is a form of tax planning to minimize the income tax burden.
Tax avoidance can be carried out responsibly by using legal methods that are permitted by regulations (Inger and Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Stekelberg, 2022.
Wang et al.
, 2.
The concept of tax avoidance is the taxpayer's attempt to take benefit of tax law loopholes, but still, the action is classified as a violation of the law's principle.
Businesses may have varying choices in their participation in tax avoidance activities.
Indeed, they are regarded to be hazardous business moves (Syukur et al.
, 2.
Tax avoidance practices carried out by companies can be observed using the effective tax rate (ETR).
Previous literature shows two ways of ETR to measure tax avoidance, namely with cash ETR and GAAP ETR or Accruals ETR.
Cash ETR uses cash tax paid as the numerator and pretax income minus special items as the denominator (Dyreng et al.
Inger and Stekelberg, 2022.
Wang et al.
, 2.
Meanwhile.
GAAP ETR or accruals ETR uses tax burden as the numerator and pretax income as the denominator (Dyreng et al.
, 2008.
Toumi et al.
, 2.
According to Donohoe & Knechel .
, if the CASH ETR was the lowest quintile, it was classified as an aggressive tax avoidance group.
According to Armstrong et al.
, lower values of the ETR represent higher levels of tax avoidance.
The influence of investment decisions on tax Investment in fixed assets by increasing longterm debt encumbers the company to pay higher interest on long-term debt.
On the other hand, this activity reduces the income tax that must be paid by the company (Ngelo et al.
, 2.
Several companies apply thin capitalization systems to evade tax (OECD, 2.
It refers to a company's reliance on debt rather than equity for funding (OECD, 2.
The loan's interest expense might reduce taxable income while enhancing a company's market value (Modigliani & Miller, 1.
Consequently, this tax avoidance is the result of a loophole in the tax code.
Normally, interest payments are deductible under tax This provision is then abused by lending a sum over what is reasonable to increase the tax burden.
As a consequence, the taxpayer's tax profit will drop, and the tax that must be paid will become tiny or the taxpayer may owe no tax at all, as the taxpayer has sustained a fiscal loss.
The money will ultimately be utilized to boost the company's investment.
The corporation began investing with the acquisition of fixed assets.
These fixed assets include buildings, mining infrastructure such as machinery and heavy equipment, transportation facilities, and supporting infrastructure like access roads and bridges.
Evana .
argues that the more investment in fixed assets, the more asset depreciation, so the company investing in fixed assets tends to have a low effective tax rate.
If the effective tax ratio decreases (ETR), the possibility of tax avoidance However, the results of Evana .
show an investment in corporate fixed assets has no significant contribution to tax avoidance.
Another research by Ha & Feng .
find that investment decisions positively affect tax avoidance.
The financial slack produced by tax savings motivates tax-evading businesses to invest.
Nevertheless, someone may claim that the positive relationship between investment decisions and tax avoidance is a symptom of managers' incapacity to allocate resources properly.
Therefore, a conflict of interest is deemed to exist.
Their findings demonstrate firms that avoid taxes are more likely to invest than firms that do not evade taxes.
H1: Investment decisions affect tax avoidance of mining companies listed on the asia pacific stock The impact of corporate financial performance on tax avoidance According to a study by Subagiastra et al.
Arinda & Dwimulyani .
, a good asset management may be judged by a higher value of return on assets.
Their research show that profitability positively affects tax avoidance.
When a firm has a big profit, its tax bill is generally high or is directly proportionate.
To limit the amount of tax paid to the State treasury, businesses are more likely to engage in tax avoidance.
Or in other words, when a business has a large profit margin, it also has a high tax burden.
To limit the amount of tax paid to the State treasury, businesses are more inclined to Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 participate in tax avoidance (Subagiastra et al.
The financial performance is also determined as one factor influencing tax avoidance.
Arinda & Dwimulyani .
examine the effect of financial performance on tax avoidance.
These results suggest that profitability positively and significantly affects tax avoidance.
This finding is related to Pratiwi .
Maidina & Wati .
, and Yesy Ratna Sari .
Meanwhile, another research conducted by Kusufiyah & Anggraini .
about the role of independent commissioners, company size, financial performance, and leverage on tax avoidance efforts shows that profitability has a negative and significant effect on tax avoidance practices.
This finding is in line with Wiratmoko .
and Supriyanto .
, who find that Return on Asset has no significant effect on ETR.
Silalahi et al.
examine the influence of profitability, company size, and investment decisions on tax avoidance of property & real estate companies listed on the Indonesia Stock Exchange for the 2016-2018 period.
The results illustrate that profitability has a significant effect on tax avoidance, and investment decisions have no significant impact on tax avoidance.
The finding corresponds to the study of Evana .
that investment decisions and financial performance affect tax avoidance.
However, this finding did not relate to Ha & Feng, 2.
This study found that tax-avoiding firms are more likely to overinvest than non-tax-avoiding firms, and the quality of the information environment moderates the relationship between tax avoidance and overinvestment.
H2: Corporate financial performance affects tax avoidance of mining companies listed on the Asia Pacific stock exchanges.
Research method Sampling and data collection techniques The sample for this research involved mining companies that were listed on the Australian Securities Exchange (ASX).
Indonesia Stock Exchange (IDX), and National Stock Exchange of India (NSEI) in the years 2017-2021 and meet three Based on purposive sampling, we determined some criteria to select a sample.
First, for the last five years, top mining companies have been listed on the Australian Securities Exchange (ASX).
Indonesia Stock Exchange (IDX), and National Stock Exchange of India (NSEI).
during the research period, mining companies released financial during the research period, mining companies made a positive pretax profit.
World Mining Congress conducted in 2018 deduced eight countries as the biggest miners in the world (Statista.
Within Asia Pacific Countries, there are China.
Australia.
India, and Indonesia, with the number of extractions of mining products 4,084.
n a million metric ton.
, 1,196.
n a million metric ton.
, 1,014.
n a million metric ton.
, and 668 .
n a million metric ton.
This study chose Australia.
Indonesia, and India as the sample countries.
China is also one of the biggest miners, but it is not selected cause of the lack of language understanding.
Table exhibits the process of sample selection.
Table 2 Process of sample selection No.
Criteria Top mining companies listed on the Australian Securities Exchange (ASX).
Indonesia Stock Exchange (IDX), and National Stock Exchange of India (NSEI).
Top mining companies registered on the Australian Securities Exchange (ASX).
Indonesia Stock Exchange (IDX), and National Stock Exchange of India (NSEI) for the last five years.
Mining companies publish financial statements during the years of study.
Not according to the criteria Total Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Mining companies that obtained positive pretax profit during the years of The samples number that meets the criteria Year of Study The total number of sample observations There are 97 top mining companies listed on the Australian Securities Exchange (ASX), the Indonesia Stock Exchange (IDX), and the National Stock Exchange of India (NSEI).
The number of data chosen in Australia.
Indonesia, and India publicly listed companies are 15, 12, and 13, sequentially.
There are two companies did not register at Indonesia Stock Exchange (IDX) during the study year, eight companies did not register at Australia Stock Exchange (ASX), and 47 companies did not achieve a positive pretax profit.
As a result, the total number of sample observations is equal to 40 companies with 200 observations.
The data for this research was collected from relevant publications, books, and published financial statements of mining firms listed on the Australian Securities Exchange (ASX), the Indonesia Stock Exchange (IDX), and the National Stock Exchange of India (NSEI) from 2017 to 2021.
Mining firms published financial statements may be downloaded straight from the Australian Securities Exchange (ASX), the Indonesia Stock Exchange (IDX), the National Stock Exchange of India (NSEI) or the website at each company's official website.
Variables operationalization Dependent variable The main variable in this research is tax Tax avoidance is an explicit kind of tax reduction (Hanlon & Heitzman, 2.
The Effective Tax Rate (ETR) is used to assess tax avoidance (Toumi et al.
, 2022.
Dyreng et al.
, 2.
It is used as a metric to identify most businesses evading taxes, which is a kind of tax avoidance.
Tax costs and pretax income are used to calculate ETR (Toumi et al.
, 2022.
Dyreng et al.
, 2.
The entire amount of taxes owed to tax authorities by a person, a corporation, or another organization is tax expenses (GAAP ETR or accruals ETR).
On the .
5 years other hand, pretax income is the cash available after all operational costs have been paid but before income taxes have been deducted (Cash ETR).
The ETR is then calculated by dividing its total tax costs by its pretax revenue (Toumi et al.
, 2022.
Dyreng et , 2.
The Effective Tax Rate (ETR) findings are compared to the Statutory Tax Rate (STR).
In a corporation, the lower the ETR, the better.
indicates that if the gap between ETR and STR is more significant, the company will have more taxsaving companies than tax planning.
ycyeCyeo ycyeoyecyeIyeayeiyeI ETRit = ycyeeyeIyeiyeCyeo ycyeayeEyeayeayeIyeOyei yeOyei Independent variables Investment decisions An investment decision is one of the decisions that financial management makes to allocate existing cash to generate future profits.
It is also the decision made by the company to spend its funds in the form of fixed assets in the hope of getting profits in the According to Evana .
, tax avoidance is also affected by fixed asset investment, which is also an investment decision conducted by the company.
Therefore, investment decision was measured by Fixed Asset Growth (FAG).
As Evana .
, the process of calculating fixed asset growth in this study used data from 2016 to 2021.
FAGit = Fixed Assetn Oe Fixed AssetnOe1 Fixed AssetnOe1 Corporate financial performance A study by Subagiastra et al.
stated that the company's good asset management might be judged by the company's high ROA value.
Their research showed that profitability positively affects tax avoidance.
When a firm has a big profit, its tax bill is generally high or is directly proportionate (Wang et al.
, 2.
To limit the amount of tax paid to the State treasury, businesses are more likely to Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 engage in tax avoidance.
As Wang et al.
, .
ROA was determined by comparing a company's net income to the total value of its assets.
its social environment (Inger and Stekelberg, 2022.
Wang et.
, 2022.
Belz et al.
, 2.
SIZEit = natural logarithm of total asset Net Income ROAit = Total Asset it Control variables Leverage The company has three ways to finance its activities equity financing by obtaining revenue to issue shares, debt financing by obtaining income through loans, and financing a combination of both types of financing (Stamatopoulos et al.
, 2.
Generally, leverage is measured by the total debt to assets ratio (DAR) (Inger and Stekelberg, 2022.
Toumi et al.
, 2022.
Wang et al.
, 2.
DARit = Total Liabilityit Total Assetit Firm size Firm size is how big or small one can classify a company, both large and small, based on its measurement using total assets.
Larger firm sizes are subject to more government regulations, so it is expected that in their behavior the firm can act under Firm age The company's age indicates how much a company can optimize the company's operations and can survive in the business market competition (Wang et al.
, 2022.
Permata et al.
, 2.
AGEit= Year of Research Ae Year of companyAos IPO Sales growth Sales growth, showing the enhancement of sales levels from year to year.
Therefore, the development can increase or decrease.
Sales growth can be measured by calculating the sales at the end of the period in year i minus the sales at the end of the period in the previous year, divided by the sales at the end of the previous year (Inger and Stekelberg.
Wang et al.
, 2.
The process of calculating sales growth in this study used data from 2016 to ycyeCyesyeIyeiyea OeycyeCyesyeIyeiyeaOeya SGit = ycyeCyesyeIyeiyeaOeya Table 3 Operationalization of variables Research Operational Dependent variable Tax avoidance Effective Tax Rate (Toumi et al.
, 2022.
Dyreng et al.
, 2008.
Hanlon and Heitzman, 2.
Independent variables Investment Fixed Asset Growth (Evana, 2.
Financial Return on Asset (Arinda & Dwimulyani, 2.
Control variables Leverage DAR (Inger and Stekelberg, 2022.
Toumi et al.
, 2.
Firm size SIZE (Inger and Stekelberg, 2022.
Measurement ycyeCyeo ycyeoyecyeIyeayeiyeI ETRit = ycyeeyeIyeiyeCyeo ycyeayeEyeayeayeIyeOyei yeOyei FAGit = yoycyeOyeoyeIyeI ycyeiyeiyeIyeiyea OeyoycyeOyeoyeIyeI ycyeiyeiyeIyeiyeaOeya yoycyeOyeoyeIyeI ycyeiyeiyeIyeiyeaOeya ycAyeIyei ycyeayeEyeayeayeI ROAit= ycyeayeiyeCyes ycyeiyeiyeIyei yeOyei yeOyei DARit = ycyeayeiyeCyes ycyeOyeCyeEyeOyesyeOyeiyeoyeOyei ycyeayeiyeCyes ycyeiyeiyeIyeiyeOyei SIZEit = ln (Total Asset.
Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Firm age Sales growth Toumi et al.
, 2022.
Belz et al.
, 2.
AGE (Wang et al.
Permata et al.
SALES GROWTH
(Inger and Stekelberg, 2022.
Wang et al.
, 2.
AGEit = Year of Research Ae Year of companyAos IPO Data analysis methods Descriptive statistics Descriptive statistics may be generated in several methods, providing a wealth of data.
It is beneficial since it provides a rapid overview of variable analysis.
The mean, standard deviation, and minimum are examples of descriptive statistics.
The information offered in research will be clearer and simpler to grasp if descriptive statistics are used (Ghozali, 2.
SGit = ycyeCyesyeIyeiyea OeycyeCyesyeIyeiyeaOeya ycyeCyesyeIyeiyeaOeya more than 0.
05, then heteroscedasticity does not Conversely, there is heteroscedasticity if the significance value is below 0.
Autocorrelation test.
This study used the run test to find out the autocorrelation in a regression model.
The run test is used to determine whether the residual value occurred randomly or not.
If the significance value of the run test is less than 0.
05, there will be Meanwhile, if the significance value of the run test is more than 0.
05, there will be free of Pre-regression tests The normality test employed non-parametric Hypothesis testing Kolmogorov-Smirnov (K-S) analysis.
The data To test the hypothesis, we applied a t-test of distribution will be normal if the K-S significance multiple linear regression models.
Effective Tax value is greater than 0.
Otherwise, the data Rate (ETR) is used to symbolize tax avoidance distribution is abnormal if the K-S significance value techniques.
Fixed Asset Growth (FAG) is used to is less than 0.
represent Investment Decisions, and Return on The multicollinearity test used the variance Assets (ROA) is used to denote financial inflation factor (VIF).
When the VIF value is more Performance.
To test the hypothesis, we applied a tthan ten and the tolerance value is less than 0.
10, the test of multiple linear regression models on 4 groups regression model is considered not multicollinear.
of samples.
To have a decent regression model, the independent Group 1 is companies listed on the stock variables should not have a solid linear connection, exchange of 3 sample countries .
enceforth, the and the amount of multicollinearity should be countries in genera.
Group 2 is companies listed on the Australian Stock Exchange .
Heteroscedasticity test.
The Glejser test is used Australi.
Group 3 is companies listed on the to see whether the regression model has residual Indonesia Stock Exchange .
Indonesi.
variance from one observation to another Group 4 is companies listed on the India Stock If the significance value between the Exchange .
fter this.
Indi.
independent variables and the absolute residual is ETRit = 1FAGit 2ROAit 3DARit 4SIZEit 5AGEit 6SGit A Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Results and discussion The analysis is classified into 4 groups of Group 1 is companies listed on the stock exchange of 3 sample countries .
enceforth, the countries in genera.
Group 2 is companies listed on the Australian Stock Exchange .
Australi.
Group 3 is companies listed on the Indonesia Stock Exchange .
Indonesi.
Group 4 is companies listed on the India Stock Exchange .
fter this.
Indi.
Descriptive statistics Table 4.
exhibits descriptive statistics of the minimum, maximum, mean, and standard deviation of 200 mining companies listed on the Asia Pacific Stock Exchanges from 2017 to 2021.
Table 4 Descriptive statistics of all samples TA (Y) ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
TA (Y) ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
TA (Y)
ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
TA (Y)
ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
The countries in general Minimum Maximum Australia Indonesia India Mean Std.
Deviation Notes: ETR is effective tax rate to measure the level of tax avoidance.
FAG is fixed asset growth to measure investment decision.
ROA is the return on asset to measure financial performance.
DAR is debt to asset ratio to measure leverage.
SIZE to measure firm AGE to measure firm age.
SG to measure sales growth.
Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Pre-regression test results Table 4.
presents the summary of classical assumption results.
Based on the results, we conclude that the study is free from classical assumption problems.
Table 5 Pre-regression test results Variables Normality Kolmogorovsmirnov Multicollinearity VIF Tolerance Heteroscedasticity Autocorrelation Glejser test Runs test The countries in general (Constan.
ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
(Constan.
ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
(Constan.
ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
(Constan.
ID (X.
FFP (X.
LEV (C.
SIZE (C.
AGE (C.
SG (C.
Australia Indonesia India Multiple linear regression analysis Table 4.
Shows the results of the regression analysis which explains the effect of investment decisions and financial performance as well as several control variables such as leverage, firm size, firm age, and sales growth on tax avoidance.
Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Table 6 Multiple linear regression analysis Dependent Variable: Effective Tax Rate (ETR) Coef The countries in general (Constan.
FFP
LEV
SIZE
AGE
F-Test R Square Adjusted R Square Australia (Constan.
FFP
LEV
SIZE
AGE
Indonesia (Constan.
FFP
LEV
SIZE
AGE
India (Constan.
FFP
LEV
SIZE
AGE
Variable Sig.
Dependent Variable: ETR Notes: ETR is effective tax rate to measure the level of tax avoidance.
FAG is fixed asset growth to measure investment decision.
ROA is return on asset to measure financial performance.
DAR is debt to asset ratio to measure leverage.
SIZE to measure firm AGE to measure firm age.
SG to measure sales growth.
Table 6 presents the results of Multiple Linear Regression Analysis.
It illustrates that investment decision has a significant effect on tax avoidance for all groups .
he countries in general.
Australia.
Indonesia, and India (Coeff.
ID=-0.
103, -0.
153, -
155, and 0.
115, with a significance value of 0.
002, 0.
013, and 0.
267 respectivel.
The significance value of investment decision was less 05 for the countries in general .
Australia .
, and Indonesia .
Since Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 ETR represents tax avoidance in this study, tax avoidance is positive when ETR has a negative Then, the negative value of the investment decisions (ID) indicates that the company is engaged in tax avoidance practice.
Therefore, it implies that investment decision has significantly positive effects on tax avoidance.
Thus.
H1 is accepted for the sample group of the countries in general.
Australia, and Indonesia.
The coefficient regression of financial performance is -0.
237, -0.
126, -0.
652, and -0.
168 for the sample group of the countries in general.
Australia.
Indonesia, and India, with a significance value of 0.
023, 0.
432, 0.
001, and 0.
614 respectively.
The significance value of financial performance is less than 0.
05 for the sample groups of the countries in general and Indonesia.
It means that financial performance has a significant effect on tax Since tax avoidance in this study is represented by ETR, tax avoidance is positive when ETR has a negative value.
Then, the negative value of corporate financial performance indicates that the company is engaged in tax avoidance practices.
Therefore, it implies that financial performance has significantly positive effects on tax avoidance.
Thus.
H2 is supported for the groups of the countries in general and Indonesia.
Leverage (LEV) as the control variable, the general coefficient regression is 0.
020, 0.
121, 0.
040 for sample groups of the countries in general.
Australia.
Indonesia, and India, with a significance value of 0.
686, 0.
265, 0.
071, and 0.
The significance value of leverage is more than 0.
05 for all the countries.
It means that leverage does not affect tax avoidance.
Another variable, firm size (SIZE), as the control variable, the coefficient regression is 0.
000, 0.
001, -0.
018, and 0.
001 for sample groups of the countries in general.
Australia.
Indonesia, and India, with a significance value of 0.
999, 0.
878, 0.
011, and 0.
876 respectively.
The significance value of firm size is less than 0.
only for Indonesia.
It means that firm size has a significant effect on tax avoidance for sample group of Indonesia.
The larger the size of the company, means that the company has substantial available resources that can be used for the benefit of the In agency theory, substantial resources owned by large companies are likely to be largescale supplies as well.
Then the agent will maximize corporate performance by emphasizing corporate tax In this case, the company has a high level of aggressiveness to take tax avoidance actions.
In line with research conducted by Irianto et al.
, this study confirms the significant effect of company size on tax avoidance.
On the variable firm age (AGE), also as the control variable, the coefficient regression is 0.
000, -0.
004, and -0.
001 for all sample groups .
he countries in general.
Australia.
Indonesia, and Indi.
, with a significance value of 0.
910, 0.
159, and 0.
716 respectively.
The significance value of firm age is more than 0.
05 for all the It means that firm age does not have any effect on the tax avoidance.
In other words, the age of the company has no significant effect on the management of the firm concerning tax burden that must be paid, as companies with earlier IPOs have more experience generating profits without engaging in tax fraud to reduce the corporate tax The last control variable is sales growth (SG), the coefficient regression is 0.
036, 0.
011, 0.
105, and 066 for all sample groups .
he countries in general.
Australia.
Indonesia, and Indi.
, with a significance value of 0.
253, 0.
848, 0.
028, and 0.
The significance value of sales growth is less than 0.
05 only in Indonesia.
It means that sales growth has a significant effect on the tax avoidance.
Since tax avoidance in this study is represented by ETR, tax avoidance is positive when ETR is a negative value.
However, the result of this study shows a positive value of sales growth in Indonesia, that is 105 shown in Table 4.
It indicates that the company is less engaged in tax avoidance practices.
Therefore, it implies that sales growth does not affect tax avoidance.
This demonstrates that great sales Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 growth does not inevitably lead to huge profits, hence it has little impact on tax avoidance.
This research is consistent with PrimasariAos .
findings that sales growth does not affect tax Table 7 Summary of hypotheses results Result Items Hypotheses Investment decisions affect tax avoidance Corporate financial performance affects tax Countries in General accepted Australia Indonesia India accepted accepted accepted accepted Notes: ( ) is a positive significant effect.
(-) is a negative significant effect.
A is Rejected.
Discussion The effect of investment decision on tax Based on the test results, we find that the effect of investment decisions on tax avoidance is significantly positive.
A negative sign between investment decisions and ETR indicates that the companies are engaged in tax avoidance.
The higher the value of the investment decisions, the higher the level of tax avoidance, so investment decisions has a significantly positive effect on tax avoidance.
The previous study conducted by Ha & Feng .
has similar results, they find that investment decisions affect tax avoidance and an increase in the value of investment decisions shows a decrease in the level of the effective tax rate, then it shows there is tax Taxpayers might attempt to evade taxation by using tax rule loopholes, one of which is the rule addressing interest charges.
Tax laws dictate that interest payments are deductible expenses.
This clause is then exploited by offering loans over what is appropriate.
the goal is to raise the fiscal burden.
hence, the tax revenue will fall, and the amount of tax that must be paid will be little.
The investment decisions, in this case, are the decisions of mining companies listed on the Asia Pacific stock exchange.
Investing in fixed assets is expected to provide economic benefits for the company in the future.
Fixed assets are used to support the corporate operations.
Fixed assets are assets that will be used continuously.
Fixed assets have an important role in expediting the operation of the company.
Companies with high investment decision values tend to avoid tax.
The selfassessment policy allows the taxpayer, in terms of the company, to determine their tax obligation.
Because depreciation is a tax deduction, companies try to increase the value of their fixed assets so that depreciation increases and the tax liabilities decline.
If the effective tax rate decreases (ETR), the possibility of tax avoidance will increase.
However, the result does not support Silalahi et al.
Evana .
They find that there is no effect between investment decisions and tax avoidance.
The effect of corporate financial performance on tax avoidance The variable of corporate financial performance does affect tax avoidance in Indonesia and the countries in general.
However, it has no significant effect in Australia and India.
Therefore, only Indonesia and the countries in general, support the second hypothesis (H.
that financial performance does affect the tax avoidance.
The results of research on the effect of financial performance on tax avoidance still produce various findings.
Previous studies conducted by Arinda & Dwimulyani .
Pratiwi .
Maidina & Wati .
Marsahala et al.
Safiinatunnajah & Setiyawati .
Widyastuti et al.
, found a significant positive effect between financial performance and tax Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Based on the result of the t-Statistical test shown in table 4.
6, it shows that there is an association between financial performance and tax avoidance since the significance of financial performance is This implies that financial performance measured by ROA has a significantly positive effect on tax avoidance.
A negative sign between financial performance and ETR indicates that the companies are engaged in tax avoidance since the tax expenses paid by the company are high.
The importance of the negative relationship between financial performance and ETR is that the higher the value of financial performance, the lower the value of ETR.
A high financial performance value assumes that the company has a high level of return on assets, while a low ETR value indicates a high level of tax The higher the value of financial performance, the higher the level of tax avoidance, so financial performance has a significantly positive effect on tax avoidance.
This study demonstrates that profitability positively influences tax avoidance.
The bigger the financial performance, the better the profitability.
The larger the company with high profits, the higher the level of tax burden to be paid.
The notion of the agency will motivate agents to improve business Agents will try to optimize their performance by managing the tax burden so as not to reduce the agent's performance compensation as a reduction in company profits.
In addition, agents strive to carry out tax planning with vigilance in determining decisions in tax matters.
When the profits rise, the amount of income tax will increase Hence it is likely that the corporation would engage in tax avoidance to prevent an increase in the tax burden.
According to Table 4.
3, the F-statistical test was conducted in this research to examine whether investment decisions and financial performance simultaneously affect tax avoidance.
The result of the F-statistical test shows that the value of the Fcount is 2.
498 significant at level 5%.
The table shows that the coefficient regression of Investment Decision (ID) is -0.
103, -0.
153, -0.
155, and 0.
115 in the countries in general.
Australia.
Indonesia, and India, with a significance value of 0.
004, 0.
013, and 0.
267 respectively.
The significance value of investment decision was less than 0.
05 for the countries in general.
Australia and Indonesia.
means that investment decision affect tax avoidance.
Since ETR represents tax avoidance in this study, tax avoidance is positive when ETR has a negative Then, the negative value of investment decision (ID) indicates that the company is engaged in tax avoidance practices.
Therefore, it implies that investment decision has significantly positive effects on tax avoidance.
Thus.
H1 is accepted for the sample groups of countries in general.
Australia, and Indonesia.
The coefficient regression of Financial Performance is -0.
237, -0.
126, -0.
652, and -0.
168 in the countries in general.
Australia.
Indonesia, and India, with a significance value of 0.
023, 0.
001, and 0.
614 respectively.
The significance value of financial performance is less than 0.
05 for the countries in general and Indonesia.
It means that financial performance has a significant effect on the tax avoidance.
Since tax avoidance in this study is represented by ETR, tax avoidance is positive when ETR has a negative value.
Then, the negative value of financial performance indicates that the company is engaged in tax avoidance practice.
Therefore, it implies that financial performance has significantly positive effects on tax avoidance.
Thus.
H2 is accepted in the countries in general and Indonesia.
Conclusions This study aims to examine the effect of investment decisions and corporate financial performance on tax avoidance.
The results show that Investment decisions and financial performance simultaneously affect tax avoidance.
The measurement of investment decisions has significantly positive effect on tax avoidance for sample groups the countries in general.
Australia, and Indonesia.
While the measurement of financial performance has a positive and significant effect on tax avoidance for groups the countries in general and Salsabila.
Diantimala / Jurnal Dinamika Akuntansi dan Bisnis Vol.
, 2023, pp 61 Ae 80 Indonesia.
This research used leverage, firm size, firm age and sales growth as control variables.
Firm size has a significantly positive effect on tax avoidance for sample group of Indonesia.
While leverage, firm age, and sales growth do not affect tax The limitations of this study is the lack of data due to the small number of mining companies.
Besides, in 2020 2021, all countries in the world were hit by a global health crisis, the Covid 19 This pandemic affected all aspects of people's lives, businesses and economies of countries around the world.
This research does not consider this issue in data, analysis, and discussions.
For further research, it is expected to broaden the research subject to get more representative data from the population and the findings can be generalized to all sectors of companies.
References