Corporate tax performance and the COVID-19 pandemic: empirical evidence from Indonesia
ISSN: 0114-0582
Article publication date: 14 August 2024
Issue publication date: 11 October 2024
Abstract
Purpose
This study aims to enhance the understanding of the impact of the COVID-19 pandemic on corporate tax performance in the context of a large emerging country like Indonesia.
Design/methodology/approach
This study uses a quantitative approach with multiple regression methods on a data set of 2,366 firm-year observations registered on the Indonesia Stock Exchange (IDX) from 2017 to 2022.
Findings
The primary empirical findings from the multivariate regressions suggest a positive and significant association between the COVID-19 pandemic and corporate tax performance in Indonesia. In other words, these listed firms have increased their tax avoidance activities during the pandemic. As firms face financial hardships due to the pandemic's effects, they tend to engage in tax avoidance practices to reduce current income tax payments, thereby enhancing their liquidity. In addition, over time, firms have adapted to use various tax policies introduced by the government in response to the pandemic to mitigate the adverse impacts of the crisis.
Research limitations/implications
This study draws on a sample solely from one emerging country.
Practical implications
The results of this study can aid governments, policymakers, tax authorities and companies in evaluating their strategies concerning preparedness and emergency responses during crises, particularly those caused by pandemics.
Originality/value
To the best of the author’s knowledge, this study is considered one of the initial efforts to examine the impact of the COVID-19 pandemic on corporate tax avoidance in an emerging country like Indonesia.
Keywords
Acknowledgements
The author would like to thank the Senior Editor (Professor Tom Scott) for the valuable opportunity. The author thanks and values the appreciations, comments, as well as the feedback provided by the editor and anonymous reviewers. The author would also like to express her gratitude to her two supervisors (from the DePaul University and Universitas Gadjah Mada), for their generous assistances and invaluable supports on her post-doctoral programs in 2024. Finally, the author extends her gratitude to Mr Drs Adang Hendrawan and Mr Dr Prianto Budi Saptono (from the Department of Fiscal Administration, Faculty of Administrative Sciences, Universitas Indonesia), who directly and or indirectly has inspired her current and future research directions in the tax accounting area.
Funding: There is no funding for the current research project.
Financial interests: The author declared no potential financial interests.
Conflict of interest: The author reported no potential conflict of interest.
Availability of data and material: All financial data are accessible through the Osiris and Thomson Reuters databases as well as firms’ annual reports.
Ethics approval: The author declared that the principles of ethical and professional conduct have been followed.
Citation
Saragih, A.H. (2024), "Corporate tax performance and the COVID-19 pandemic: empirical evidence from Indonesia", Pacific Accounting Review, Vol. 36 No. 3/4, pp. 402-432. https://doi.org/10.1108/PAR-01-2024-0001
Publisher
:Emerald Publishing Limited
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