ISSN: 2988-7615 | 2024(8)

Page 649-658

Research Article

Marchell Teja1*, Herry Goenawan Soedarsa2, Khairudin3

Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)
*Corresponding Author: Marchell Teja: Universitas Bandar Lampung, Indonesia; marchell.20021018@student.ubl.ac.id
Herry Goenawan Soedarsa: Universitas Bandar Lampung, Indonesia.
Khairudin: Universitas Bandar Lampung, Indonesia.

Received: January 23, 2024; Accepted: January 26, 2024; Online: January 31, 2024 | DOI: https://doi.org/10.47353/ijema.v1i8.93

Abstract: According to The State of Tax Justice 2020 report, Indonesia's position in tax avoidance cases is ranked
fourth in Asia. This research aims to examine the factors that affect tax avoidance in manufacturing companies on
the Indonesia stock exchange. This research covers the building construction manufacturing business of the
Indonesia Stock Exchange in 2021–2022. Purposive sampling was used in this study and produced 34 samples. This
research uses descriptive statistics, classical assumption tests, and multiple linear regression. This research found
that Audit Quality and Profitability have a significant positive impact on Tax Avoidance.
Keywords: Tax Avoidance, Quality Audit, manufacturing company

Introduction
Companies are motivated to reduce their tax payments when faced with a high tax burden, as shown
by the Effective Tax Rate (ETR) (Kiswanto et al., 2020). This is the fundamental factor that drives many
individuals and even organizations to avoid tax. Tax avoidance behavior attempts to minimize the
company's tax obligations by manipulating its profits. This activity will certainly reduce the company's
value in the eyes of investors. However, it remains in accordance with tax regulations by taking advantage
of valid exceptions and deductions, as well as tax deferrals that are not yet regulated in the applicable tax
laws and regulations. (Tebiono et al., 2019) This action is usually implemented through policies established
by company executives. Even though tax avoidance is legal, the government still opposes it.
Approximately 25% of corporate income is allocated to taxes, thereby creating motivation for
companies to engage in tax planning efforts, thereby increasing the possibility of tax authorities detecting
their involvement in tax avoidance (Chaudhry 2014). The phenomenon of many multinational companies
transferring profits to countries is considered a tax utopia. An average tax ratio that is below the target may
indicate significant tax avoidance, resulting in suboptimal tax collection for the Indonesian state(Darmawan
and Sukartha et al., 2014).
PT. Indofood Sukses Makmur Tbk. The practice of tax avoidance was reported to be worth IDR 1.3
billion. This case started when PT Indofood Sukses Makmur Tbk (INDF) established a new company and
transferred the assets, liabilities and operations of the Noodle Division (instant noodle factory) to PT
Indofood CBP Sukses Makmur Tbk (ICBP ), this could be said to be expanding the business to avoid taxes,
but with this business expansion the DJP still made the decision that the company must continue to pay the
tax owed amounting to 1.3 billion (www.gresnews.com 2013).
Considering the research background, can identify various research problems. Specifically, we want
to know whether the independent factors of audit quality and profitability have an impact on the dependent
variable tax avoidance. The research problem formulation shows that the research objective is to determine
the impact of the independent factors of audit quality and profitability on the dependent variable tax

Open Acces © Marchell Teja et al 649

Publish by Lafadz Jaya Publisher

This work is licensed under the Creative Commons Attribution 4.0

 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

avoidance. Research provides advantages for regulators in developing better and more comprehensive
regulations for tax supervision, so that they can optimize state revenues. This study provides valuable
insights for companies, especially those operating in the manufacturing sector, which can be used for future
company analysis and assessment purposes. Future researchers will benefit from the ability to provide
information or references related to this research.

Literature Review
Tax Avoidance
Tax avoidancerefers to a deliberate strategy aimed at reducing the amount of tax owed by exploiting
legal loopholes in a country's tax laws. According to the analysis carried out by (Hakim Reddy Giridharan
et al., 2016), Tax avoidance refers to the practice of avoiding taxes in a legal way. According to research
(James Kessler Andersonet et al., 2018), tax avoidance can be categorized into two types, namely:
• Acceptable tax avoidance refers to the practice of legally minimizing tax liabilities by complying with
certain criteria, such as having a legitimate purpose, not committing tax evasion, and not committing
fraudulent activities.
• Unacceptable tax avoidance refers to deliberate actions to evade taxes by carrying out fraudulent
practices such as carrying out transactions without a legitimate purpose and carrying out fictitious
transactions.
(Rahiminejad et al., 2018)Tax avoidance refers to the lawful and justifiable practice of minimizing
tax liabilities by using tax planning strategies that comply with the limitations set by tax law. In essence,
tax avoidance is considered legal because it does not conflict with tax regulations. Nonetheless, this
approach may have a significant impact on a country's tax revenues. Therefore, it is recognized that tax
avoidance is an undesirable activity. Tax avoidance is in an ambiguous realm, precisely between tax
compliance and tax evasion.
This research uses CETR (Current Effective Tax Rate) as a substitute for tax avoidance. CETR is a
metric used to assess the extent to which an organization is involved in tax avoidance. In the case of tax
avoidance, it is calculated by dividing the current tax liability by profit before tax. The following formula
is used to determine CETR, which is calculated using the tax avoidance ratio scale according to(Sterling
and Christina et al., 2021):
CETR = Current Tax Expense / Profit Before Tax

Audit Quality and Tax Avoidance

Based on research findings(Oliviana and Muid Empirical et al., 2019) There is a relationship between
audit quality and tax avoidance. As a consequence, The Big Four KAP auditors are seen as having more
professionalism and expertise compared to The Big Four non-KAP auditors. Big Four KAP auditors are
renowned for their expertise in identifying deficiencies or fraudulent activities in a company's financial
statements. As a result, corporations examined by KAP The Big Four will face challenges in carrying out
tax avoidance. Based on research findings conducted (Eksandy, 2017), it was found that there was a positive
impact of audit quality on tax avoidance. Evidence shows that audit quality has a beneficial impact on tax
avoidance practices.
The quality of auditors can be assessed through the categorization of audits carried out by KAP The
Big Four and KAP The Non-Big Four.(Mody Kusumatuti et al., 2022)Using the following nominal scale or
fictitious variable, audit quality is measured: A value of 1 displays organizations that continue to use the

https://ij.lafadzpublishing.com/index.php/IJEMA/index 650
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

audit services of the Big Four KAPs, which are the four largest KAPs globally. A value of 0 represents
organizations that use non-Big Four KAP audit services or the four largest KAPs globally (Muh Ajron &
Yohanes, 2023).
H1: Audit quality has a positive effect on Tax Avoidance

Profitability and Tax Avoidance

Profitability is the key to a company's success in gaining profits(Azhari & Nuryatno,
2020).Research(Ajron & Yohanes, 2023)argue that profitability has a beneficial impact on tax avoidance
practices. Consequently, organizations displaying great profitability must manage their tax planning
strategically to minimize their tax liabilities effectively. According to the latest research conducted by
(Sterling and Christina et al. 2021), it shows that profitability is inversely related to tax avoidance. This
shows that the level of profit obtained has a direct impact on the amount of tax that must be paid. When the
company's income increases, the costs incurred also increase. As a result, companies carry out tax avoidance
strategies to reduce the amount of tax they have to pay (Chandra Ariyanto & Goenawan Soedarsa, 2022).
Return on Assets (ROA) can function as a substitute for profitability because of its ability to characterize
an organization's profits (Anggraeni & Febrianti, 2019). ROA is calculated by dividing the company's net
profit by total assets at the end of the period; it serves as a measure of business profitability. In this context,
profitability is determined by dividing net profit by total assets. As stated by (Sterling and Christina et al.,
2021), the following formula can be used to measure profitability on a ratio scale:
ROA = Profit After Tax/ Total Assets
H2: Profitability has a positive effect on Tax Avoidance

Figure 1. Framework of Thought

Image Source: Author's Process

Method
This quantitative research examines how audit quality and profitability impact tax
avoidance.(Sugiyono et al., 2017)Associative research is a type of research that attempts to determine the
impact or correlation between two or more factors. The sample in this research is companies in the building
construction subsector listed on the IDX in 2021-2022. Data collection is carried out through a
documentation process. The purpose of this document is to collect data in the form of verified financial
reports from the company. Documents are archival documents that record historical events, including
various media such as written text, illustrations, or significant artistic creations(Sugiyono et al., 2017). Data
obtained from idnfinancial.co.id and idx.co.id.

https://ij.lafadzpublishing.com/index.php/IJEMA/index 651
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

The sample selected from the existing population was determined through the application of
purposive sampling. This is done to ensure that the data obtained meets the research objectives and can be
compared fairly with the findings of previous investigations. In accordance with the methodology
mentioned above, the sample selection criteria for this investigation consisted of the following:
1. Companies registered on the IDX.
2. Financial report data for the 2021-2022 period.
3. Financial reports are presented in Indonesian currency.
Based on the criteria above, 17 companies registered on the IDX were used as samples for this research.

Table 1. Sample companies

No. Stock code Company name
1 PTPP PT Pembangunan Perumahan Tbk
2 WIKA PT Wijaya Karya Tbk
3 ADHI PT Adhi Karya Tbk
4 BUCK PT Bukaka Teknik Utama Tbk
5 ACST PT Acset Indonusa Tbk
6 SSIA PT Surya Semesta Internusa Tbk
7 JKON PT Jaya Kontruksi Manggala Pratama Tbk
8 TOTL PT Total Gedung Persada Tbk
9 PBSA PT Paramita Bangun Sarana Tbk
10 PPRE PT PP Presisi
11 PTPW PT Pratama Widya Tbk
12 DGIK PT Nusa Kontruksi Engineering Tbk
13 RONY PT Aesler Group Internasional Tbk
14 IDPR PT Indonesia Pondasi Raya Tbk
15 SMKM PT Sumber Mas Kontruksi Tbk
16 WSKT PT Waskita Karya Tbk
17 MTPS PT Mitra Pemuda Tbk
Source: Author's Processed Results

Results and Discussion

Table 2. Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Audit Quality 34 0 1 .15 ,359
ROA 34 -3.39 .28 ,1071 ,06305
Tax Avoidance 34 -,24 2.12 ,1559 ,14163
Valid N(listwise) 34
Source: Data processed by SPSS 17

Based on the results of descriptive statistics it can be assessed as follows:

a) Of these 34 data, the highest (maximum) Audit Quality score is owned by JKON in 2021 and TOTL
IDPR SMKM WSKT in 2022. The lowest (minimum) audit quality score is owned by other PTs. The

https://ij.lafadzpublishing.com/index.php/IJEMA/index 652
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

mean value of Audit Quality is 0.15. The average Audit Quality value is more inclined towards the
minimum value, which means that the company's average Audit Quality is quite low.
b) From a sample of 34, the smallest (minimum) Profitability value can be taken as -3.39RONY 2022. The
largest (maximum) Profitability value is 0.28 ACST 2021. The mean value of Profitability is 0.1071.
The average Profitability value tends to be more towards the maximum value, which means that the
company's average Profitability tends to be high.
c) From a sample of 34, the smallest (minimum) Tax Avoidance value can be taken as -0.24 JKON 2021.
The largest Tax Avoodance (maximum) value is 2.12 IDPR 2022. The mean value of Tax Avoidance is
0.1559. The average Tax Avoidance value tends to be more towards the minimum value, which means
that the company's average Tax Avoidance tends to be high.

Classic assumption test

Normality test
Assessing data normality is the aim of testing the normality of the regression model. The results of
the data normalization test were carried out using a single sample test Kolmogorov-Smirnov.

Table 3. Normality Test

One Sample Kolmogorov-Smirnov Test
Unstandardized Residual
N 34
Normal Parameters a, b Mean ,0000000
Std. Deviation ,37780084
Most Extreme Difference Absolute ,272
Positive ,272
Negative ,272
Statistical Tests ,272
Asymp. Sig. (2-tailed) ,178c
Source: Data processed by SPSS 17

a. Test distribution is Normal.

b. Calculated from data.
c. Lilliefors Significance Correction.
The table above displays the residual values tested using the Kolmogorov-Smirnov test, with the
corresponding asymptotic values. The p-value (two-sided) is 0.178 > 0.05. This shows that the data
distribution for all research variables is normal so that research can continue.

Linearity Test
The linearity test determines whether the model being built displays a linear relationship or not, which
is indicated by the line plot connecting the variables (typical PP).

https://ij.lafadzpublishing.com/index.php/IJEMA/index 653
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

Figure 2. Line plot between variables (normal PP)

Source: Data processed by SPSS 17

Figure 2 is a graph that displays the relationship between residual value (ZRESID) and projected
value (ZPRED) in the second (multiple) regression path. This figure allows us to assess the linearity of the
multiple regression model. The model in this research is linear because the residual value is parallel to the
residual path. See Figure 1 for a standard representation

Multicollinearity Test
Table 4. Multicollinearity Test Results
Collinearity Statistics
Model Tolerance VIF
1 (Constant)
Audit Quality ,993 1,007
ROA ,993 1,007
Source: Data processed by SPSS 17

It can be seen from the table above that the VIF of all independent variables is below 10. Therefore,
it can be concluded that the model does not deviate from traditional assumptions regarding multicollinearity
between the independent variables.

Heteroscedasticity Test

Figure 3. Autocorrelation Test Results

Source: Data processed by SPSS 17

https://ij.lafadzpublishing.com/index.php/IJEMA/index 654
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

Figure 3 displays that by focusing on ZPRED (predicted value) and ZRESID (residual value), one
can see certain patterns. The derived model does not have a clear pattern on the graph, thus showing that
the model is free from heteroscedasticity problems

Autocorrelation Test
Table 5. Autocorrelation Test Results
Model R R Square Adjusted R Square Std. Error of the Durbin-Watson
Estimate
1 ,420a ,176 ,123 ,38980 1,949
Source: Data processed by SPSS 17
a. Predictors: (Constant), ROA, Audit Quality
b. Dependent Variable: Tax Avoidance

From the results of data testing, the research has a DW value = 1.949, which is around 2, so the data
is free from autocorrelation problems

Multiple Linear Regression

Table 6. Multiple Linear Regression Test Results
Unstandardized Standardized
Coefficients Coefficients
Model Beta t Sig.
B Std. Error
1(Constant) ,089 0.74 1,206 ,237
Audit Quality ,479 ,189 ,413 2,528 ,017
ROA ,532 ,108 ,048 4,295 ,001
Source: Data processed by SPSS 17

The obtained regression equation provides the following interpretation of the regression model:
1. Impact of Audit Quality on Tax Avoidance
The t test findings above show that audit quality has an impact on tax avoidance techniques. The test
results show that audit quality has a significant impact on tax evasion with a p-value of (0.017<0.05).
Therefore, it can be concluded that audit quality has a significant impact on tax avoidance practices.
2. The Impact of Profitability on Tax Avoidance
The t test findings show that profitability as measured by ROA has a significant impact on the use of
tax avoidance strategies. The test results show that profitability has a significant impact on tax avoidance,
with a p-value of 0.001 < 0.05. Profitability has a fairly large impact on tax avoidance practices.

Closing
Conclusion
After analyzing the research data above, audit quality and profitability have a positive impact on tax
avoidance in manufacturing companies in the construction and building subsector in 2021-2022. The better
the audit quality a company has, the smaller the company's tax avoidance will be. The higher the company's
profitability, the more vulnerable the company is to tax avoidance.

https://ij.lafadzpublishing.com/index.php/IJEMA/index 655
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

Suggestion
Future research is expected to include other characteristics that are believed to have an impact on
corporate tax avoidance. As well as adding to the coming year.

References
I Gede Hendy Darmawan I Made Sukartha. (2014) Dampak Penerapan Corporate Governance, Leverage,
Return On Assets, Dan Ukuran Perusahaan Pada Penghindaran Pajak 8635-1-19911-1-10-20141028.
(n.d.).
Ajron, M., & Yohanes, A. (2023). Dampak Profitabilitas, Capital Intensity DAan Leverage Terhadap Tax
Avoidance (Vol. 3, Issue 1). http://jurnaltsm.id/index.php/EJATSM
Anderson, E. J., Fujisaki-Manome, A., Kessler, J., Lang, G. A., Chu, P. Y., Kelley, J. G. W., Chen, Y., &
Wang, J. (2018). Ice forecasting in the next-generation Great Lakes Operational Forecast System
(GLOFS). Journal of Marine Science and Engineering, 6(4). https://doi.org/10.3390/jmse6040123
Anggraeni, R., & Febrianti, M. (2019). Faktor-Faktor Yang Memdampaki Tax Avoidance Pada Perusahaan
Manufaktur Di Bursa Efek Indonesia (Vol. 21). http://jurnaltsm.id/index.php/JBA
Azhari, F., & Nuryatno, M. (2020). Peran Opini Audit Sebagai Pemoderasi Dampak Profitabilitas, Ukuran
Perusahaan, Kepemilikan Institusional, Dan Komite Audit Terhadap Ketepatan Waktu Pelaporan
Keuangan. Jurnal Magister Akuntansi Trisakti, 7(1), 61–84. https://doi.org/10.25105/jmat.v7i1.6337
Chandra Ariyanto, D., & Goenawan Soedarsa, H. (2022). Pengaruh Independensi, Pengalaman Kerja,
Objektivitas, Dan Audit Fee Terhadap Kualitas Audit. SINOMIKA Journal: Publikasi Ilmiah Bidang
Ekonomi Dan Akuntansi, 1(3), 589–598. https://doi.org/10.54443/sinomika.v1i3.318
Chaudhry, N. (2014). The Effect of the Funding Status of Defined Benefit Pension Plans on Tax Avoidance
and Investment Efficiency.
Empiris, S., Manufaktur Yang Terdaftar, P., Efek, B., Oliviana, A., & Muid, D. (2019). Dampak Good
Corporate Governance Terhadap Tax Avoidance. DIPONEGORO JOURNAL OF ACCOUNTING,
8(1). http://ejournal-s1.undip.ac.id/index.php/accounting
Giridharan, V. V., Thandavarayan, R. A., Fries, G. R., Walss-Bass, C., Barichello, T., Justice, N. J., Reddy,
M. K., & Quevedo, J. (2016). Newer insights into the role of miRNA a tiny genetic tool in psychiatric
disorders: focus on post-traumatic stress disorder. In Translational Psychiatry (Vol. 6, Issue 11).
Springer Nature. https://doi.org/10.1038/TP.2016.220
Kiswanto, Harjanto, A. P., Suryarini, T., Apriliyana, N., & Kadir, A. (2020). Tax Avoidance In Indonesia:
Context Of Good Corporate Governance And Corporate Social Responsibility Humanities & Social
Sciences Reviews, 8(2), 270–279. https://doi.org/10.18510/hssr.2020.8230
Mody Kusumatuti, F., Emha Amir Fikri Anas, D., & Nur Achadiyah, B. (n.d.). Dampak Karakter
Eeksekutif, Ukuran Perusahaan, Kualitas Audit Dan Jumlah Komite Audit Terhadap Tax Avoidance.
In Journal Riset Mahasiswa Manajemen (JRMM) (Vol. 8). http://ejournal.unikama.ac.id
Dampak Komisaris Independen, Komite Audit, Dan Kualitas Audit Terhadap Penghindaran Pajak (Tax
Avoidance) (Studi Empiris Pada Sektor Industri Barang Konsumsi yang terdaftar di Bursa Efek
Indonesia Periode 2010-2014). (n.d.).
Rahiminejad, S., Anderson, M., Warsame, H., & Rashid, H. (n.d.). Corporate Tax Avoidance and Customer
Satisfaction.
Rasio Keuangan, P., Perusahaan, U., & Sterling Silvy Christina, F. (2021). Umur Perusahaan Terhadap Tax
Avoidance (Vol. 1, Issue 3). http://jurnaltsm.id/index.php/EJATSM

https://ij.lafadzpublishing.com/index.php/IJEMA/index 656
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

Tebiono, J. N., Bagus, I., & Sukadana, N. (2019). Faktor-Faktor Yang Mendampaki Tax Avoidance Pada
Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia (Vol. 21).
http://jurnaltsm.id/index.php/JBA
Yani, J. A., Mangkunegara, A., & Aditama, R. (1995). Sugiyono. 2017, Metode penelitian kuantitatif,
kualitatif, dan R&D. bandung: Alfabeta. Procrastination And Task Avoidance: Theory, Research and
Treatment. New York: Plenum Press, Yudistira P, Chandra, Diktat Ku.

https://ij.lafadzpublishing.com/index.php/IJEMA/index 657
 Marchell Teja et al Factors Affecting Tax Avoidance (Study in Manufacturing Companies of
Building Construction Sub-Sector of Indonesia Stock Exchange)

https://ij.lafadzpublishing.com/index.php/IJEMA/index 658