How The Impact Return on Assets, Debt to Equity Ratio and Scales Growth on Tax Avoidance?: Explanatory Research (Study of Mining Companies Listed on Indonesia Stock Exchange Period 2017-2021)

Abstract

Purpose: The goal of this research is to determine if factors like as return on assets, debt-to-equity ratios, and sales growth have an impact on tax evasion, Tax avoidance is a strategy used by businesses to avoid paying taxes, which lowers state tax receipts.

Theoretical framework: The return On Assets ratio measures the rate of return on each rupiah invested in assets. (Kasmir, 2018). Agency theory incentivizes agents to build up corporate profits, therefore when corporate profits increase, the income tax rates increase (Darmawan and Sukartha, 2014). The more the ROA value, the greater the firm's net profit and the more prudent the investment the company is. (Kurniasih and Sari, 2013).

Design/methodology/approach: Research period used is the year 2017-2020. Explanatory research using quantitative research techniques is this sort of study. The population of this research consists of mining businesses with IDX listings. While the purposive sampling technique was used to choose this study sample. Documentation studies and literature studies are two data collecting methods employed. Panel data regression, the traditional assumption test, and the t-test were the data analysis techniques employed

Findings: The findings revealed that while debt to equity ratio and sales growth had an influence on tax evasion, return on assets had no effect.

Research, Practical & Social implication: tax avoidance here is only based on financial statements that do not describe the real situation because data about tax avoidance is difficult to obtain. So, It is anticipated that it would be able to make use of actual situations, such as questionnaire data or open interviews pertaining to tax evasion

Originality/value: Return on assets (ROA) doesn’t impact tax avoidance, Debt to Equity Ratio impacts Tax Avoidance, Sales Growth impacts Tax Avoidance.