FISCAL LOSS COMPENSATION, PROFITABILITY, LEVERAGE, AND TAX AVOIDANCE: EVIDENCE FROM INDONESIA

Abstract

The purpose of this research was to examine the effects of fiscal loss compensation profitability and leverage on tax avoidance practices by manufacturing companies listed on the Indonesia Stock Exchange between 2011-2015. The research population of this work are manufacturing companies that were listed on the Indonesia Stock Exchange between 2011-2015. In this work, study samples were selecting using purposive sampling. Study samples that met acceptance criteria consisted of 50 firms. The unit of analysis in this study was 250, which was based on the 50 firms that met acceptance criteria multiplied by the the observation period of five years. The developed hypothesis of this work was analyzed using panel regression analysis with fixed effect method. The results from this research demonstrated that fiscal loss compensation and profitability had a positive impact on tax avoidance whereas leverage had no significant effect on the manufacturing companies analyzed in this work.