The Impact of Corporate Governance on Corporate Tax Avoidance in Indonesia

Abstract

. Tax is the main source of income in Indonesia which aims to encourage sustainable and equitable economic growth. If the economy runs stably, then economic growth will increase from year to year. This research is based on the rise of tax avoidance phenomenon in Indonesia. Corporate tax avoidance is heavily influenced by several components of corporate governance pressure. The purpose of this research is to look into the impact of company governance on tax evasion. The Corporate Governance Perception Index (CGPI) released by the Indonesian Institute for Corporate Governance (IICG) serves as a proxy for variable corporate governance in this study, whereas tax avoidance variables are quantified by the effective tax rate. The companies included in this study were those that were listed on the Corporate Governance Perception Index between 2013 and 2017. Purposive sampling criteria and regression linier analysis were utilized in this study. The findings revealed that corporate governance had a favorable and considerable impact on tax evasion.