ARTICLE
TITLE

The Study On The Effect And Determinants Of Small - And Medium-Sized Entities Conducting Tax Avoidance

SUMMARY

SME often lack the capacity to keep transparency in management due to a small number of information users. Thus, the adoption of K-IFRS can be burdensome to numerous SME, which led to the enactment of Accounting Standards for Small- and Medium-sized Entities (AS-SME). AS-SME allows the accountants to easily implement accounting rules when writing financial statements and the users to comprehend useful information. SME hold less tax burden since they receive a tax deduction and exemption from the Tax Act. Thus, we conjecture that the financial determinants of tax avoidance between SME and non-SME will differ. We divide the total sample according to the corporate tax avoidance and empirically examine whether the difference actually exists. Our sample consists 18,954 audited firms including those external audited from 2011 to 2013. This study implements BTD, the difference between accounting profit and taxable income and estimated corporate tax avoidance (TS), which is the part that cannot be explained by total accruals in BTD to proxy for tax avoidance. (Desai and Dharmapala 2006). We summarize our findings as below: there is a significant distinction between SME and non-SME regarding the related financial determinants. The result shows that firm size (SIZE), profitability (ROA), leverage (LEV), operating cash flow(CFO), capital intensity (PPE), R&D intensity (RNDS), and growth rate (GS) all influence the corporate tax avoidance of SME. Our result also suggests that there is variation in the determinants among the SME with high corporate tax avoidance. The attempt to investigate the financial determinants of the tax avoidance in SME can be a barometer of the effectiveness of AS-SME, which is enacted to lessen the tax burden of the SME. We intend to provide policy implication regarding SME subsidy by examining the motive for corporate tax avoidance in SME.

 Articles related

Francois van Dyk, Gary van Vuuren, Andre Heymans    

The Sharpe ratio is widely used as a performance evaluation measure for traditional (i.e., long only) investment funds as well as less-conventional funds such as hedge funds. Based on mean-variance theory, the Sharpe ratio only considers the first two mo... see more


Florina PÎNZARU,Andreea MITAN    

During the last few years, the concerns regarding the youth in the European Union have become a topic of high interest for the European Commission. The official data gathered by the European authorities show that the early school leaving and youth unempl... see more


Catalina CICEI    

Balancing work and family demands has become a great challenge for employees. By providing flexible benefits, organizations actively engage in endeavours aimed at reducing the negative interference between the two life spheres. Even if some empirical stu... see more


Wuryan Andayani,Sony Warsono    

This study observed the influence of the company prospector-defender strategy and auditor industry specialization toward the earnings management through real activities and earnings quality. An important finding in this study confirmed that the... see more


Shine Pintor Siolemba Patiro,Basu Swastha Dharmmesta,Sahid Susilo Nugroho,Bayu Sutikno    

This correlational study explored the psychological antecedents of Indonesian bodybuilders’ intentions to use anabolic–androgenic steroids (AAS), based on the Theory of Planned Behavior (TPB). The purpose of this research was to identify factors that inf... see more