VOLUME X NO X | MONTH YEAR Journal Page: ejurnal.pajak.go.

id ISSN 2686-5718

Financial Distress, Capital Intensity, Inventory Intensity, and its Influence

on Tax Aggressiveness in Indonesia
Aprilia Fika Putri Maedaa,Elok Heniwatib
a
Faculty of Economic and Business, Universitas Tanjungpura, Pontianak, Indonesia. Email: [email protected]
b
Faculty of Economic and Business, Universitas Tanjungpura, Pontianak, Indonesia. Email: [email protected]

* Corresponding author: [email protected]

ABSTRACT

This study aims to determine the effect on tax aggressiveness on the variables Financial Distress, Capital Intensity
and Inventory Intensity. This research use Agency theory as the grant theory because Tax Aggressiveness is one of
the type III agency conflict within companies is believed to be minimized by the implementation of good corporate
governance, which helps improve the mechanism of supervision by internal and external parties as well as by the
government. The sample of this study is basic industries and chemical companies listed on the main board of the
IDX stock list from 2019 to 2021. The analysis methods used are descriptive analysis, Classical Assumption Test, and
Hypothesis Testing with IBM SPSS 29, This study uses purposive sampling techniques in determining the sample.
Tax aggressiveness is measured by effective tax rate, while financial distress is measured by Altman Z-Score, Capital
intensity is measured by dividing total fixed assets by total assets, and inventory intensity is measured by dividing
total inventory by total assets. The results found from 81 samples in this study were the finding of the influence
between financial distress variables on tax aggressiveness, so the first hypothesis was accepted.
Keywords: Tax Aggressiveness, Financial distress, Inventory Intensity, Capital intensity

1. INTRODUCTION practice can be done by minimizing tax payments

In a corporate dimension, tax after deducting personal expenses through
aggressiveness is seen as an attempt to various means of tax avoidance or savings. This
manipulate taxable income to fall through tax action to minimize the tax burden can later
planning which may or may not be considered tax influence the company's decision to carry out tax
evasion fraud. Tax aggressiveness can also be in aggressiveness and tax avoidance.
the form of actions aimed at reducing taxable Taxes are one of the government's main
profits through tax planning using both legal (Tax sources for funding development in the central
Avoidance) and illegal (Tax Evasion) methods. The and local areas, such as building public facilities,
company is considered to be more aggressive if it financing health and education budgets, and
is able to use many loopholes. Cases of tax productive activities another. Tax collection can
aggressiveness often occur in the transfer of be forced because it is carried out under the law.
wealth from corporations to governments. The Indonesian state began to implement tax
Because, the tax burden that becomes a cost is collection with a self-assessment system or tax
considered very large for the company. Simple collection that gives confidence and responsibility

1
doi:
Received: ; Accepted: ; Published:
2686-5718 © 2023 Scientax: Jurnal Kajian Ilmiah Perpajakan Indonesia. Published by Direktorate General of Taxes
This is an open access article under the CC BY-NC-SA licence (https://creativecommons.org/licenses/by-nc-sa/4.0/)
Scientax: Jurnal Kajian Ilmiah Perpajakan Indonesia is Sinta 4 Journal (https://sinta.kemdikbud.go.id/journals/profile/9121)
How to Cite:
[Aprilia Fika Putri Maeda] / Financial Distress, Capital Intensity, Inventory Intensity, and Its
Influence on Tax Aggressiveness In Indonesia (2023) x-xx

to taxpayers to take the initiative in registering (Rahmawati, 2018). The high growth of this sector
themselves to get a Taxpayer Identification indicates higher income and triggers a large
Number (Nomor Pokok Wajib Pajak/NPWP) and income tax burden (Richardson et al., 2013).
take care of all tax matters independently to the Therefore, this study aims to re-examine the
Director General of Taxes. The implementation of factors that influence tax aggressiveness practices
this system is expected to meet the principle of in companies in the basic and chemical industry
fairness and facilitate the fulfilment of tax sectors. Financial distress, capital intensity,
obligations but in fact it still contains weaknesses, inventory intensity, and tax aggressiveness are all
namely the aggressiveness of taxes carried out by important factors that can influence the tax
taxpayers. In the field of accounting, tax is one of strategies of companies in Indonesia. Agency
the cost components that can reduce the theory is a theory which includes a contract
company's profit. The amount of tax that must be between the manager (agent) and the owner
deposited into the state treasury depends on the (principal). For this contractual relationship to run
amount of profit earned by the company. smoothly, the owner will delegate the decision-
As a profit-oriented entity, tax payments making authority to the manager. Appropriate
in accordance with the provisions will certainly contract planning to align the interests of
conflict with the main goal of the company, which managers and owners in the event of a conflict of
is to maximize profits or profits, So the company interest is at the core of agency theory. But to
strives to minimize the tax costs it bears. The way create the right contract is a difficult thing to
that companies do to reduce the amount of tax realize. Therefore, investors are required to give
paid is to lower profits before tax by involving tax residual control rights to the manager (residual
aggressiveness activities, which consist of control right), namely the right to make decisions
management efforts to lower their company's under certain conditions that have not been seen
revenue before tax through various tax planning in the contract (Jensen & Meckling, 1976). The
strategies. Tax Aggressive is an action that aims to delegation may trigger agency conflicts caused by
engineer a company's taxable profits through tax information asymmetry because the agent has
planning, either using legal (tax avoidance) or more relevant information than the principal
illegal means (tax evasion). regarding the condition of the company and
The phenomenon of tax aggressiveness because the principal cannot judge whether the
cases occurred at PT Coca Cola Indonesia. PT agent has worked in accordance with the
Coca-Cola Indonesia (CCI) is suspected of agreement (Armour, Hansmann, & Kraakman,
engineering taxes in such a way as to cause a tax 2009). In the context of tax aggressiveness,
payment shortfall of Rp. 49.24 billion. The results management has an interest in manipulating
of the search conducted by the Directorate corporate profits which in turn will reduce the tax
General of Taxes found that there were cost debt borne by the company. This manipulation
overruns that resulted in reduced taxable income can be done because there is asymmetric
which automatically increased the tax burden of information between the management that
PT. Coca Cola will also shrink. makes and runs the accounting system and the
Based on the above phenomenon, tax principal as the user of financial statements. This
aggressiveness is often carried out by large interest is different from the interests of investors
companies. This is because the company feels who do not want tax aggressiveness because it
burdened with the amount of tax it must bear. has the potential to disrupt business continuity if
The Indonesia Stock Exchange recorded a the company encounters legal problems. Tax
very large growth in basic and chemical industry aggressiveness is one of the type III agency
companies during 2018. According to the IDX, conflicts, which occurs between the company as
this sector grew by 21.17% year to date the internal party and the tax fiscus as the external
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party. Tax aggressiveness is a form of information by Nugroho, Sutrisno and Mardiati (2020) and
asymmetry since the tax fiscus does not know Jaffar, Chek and Roshaiza (2021) which show that
about tax aggressiveness committed by the financial distress affects tax aggressiveness.
company. Agency conflict within companies is Companies that are in financial distress may be
believed to be minimized by the implementation more likely to engage in tax aggressive behavior
of good corporate governance, which helps to reduce their tax liability and improve their
improve the mechanism of supervision by internal financial position. This can include activities such
and external parties as well as by the government. as transferring profits to low-tax jurisdictions or
Optimal supervision of corporate governance is using complex tax structures to reduce taxable
expected to reduce tax aggressiveness. income. However, such practices can also
Agency conflicts arise in the relationship increase the risk of legal and reputational
between principals and agents if there is no damage. Financial distress causes operational
balanced information between them (information activities not to run smoothly, to run its business a
asymmetry). That is due to the fact that investors company needs working capital to finance its
(principals) do not necessarily have information activities, management will try to find a way to run
similar to management (agents) who have direct its operations by way of obtaining debt For this
access to business activities. So, his agent is reason, the company will seek to manipulate
considered to have more complex information revenues in order to tax the paid less, if this is
than the principal. This tends to cause the agent done continuously then the company will be
to perform dysfunctional behavior. One of them is perceived as tax aggressiveness. This statement is
manipulating data in financial statements, so as to in line with research conducted by Swandawi &
meet the expectations of principals; although, it Noviari (2020) and Sadijarto et al. (2020), which
does not describe the actual condition of the states that financial distress has a positive impact
company (Pajriyansyah and Firmansyah, 2016). on tax aggressiveness (tax avoidance). Based on
The information asymmetry provides an the explanation above, researchers predict the
opportunity for management to use their policies influence of companies experiencing financial
of managing accounting information including distress on tax aggressiveness.
policies to perform Tax Aggressiveness for the Capital Intensity is also a factor that affects
benefit of the company as well as personal gain. Tax Aggressiveness, Companies that have high
Some of the factors that can affect tax levels of capital intensity, such as those in the
aggressiveness in a company are first financial manufacturing or mining sectors, may also be
distress. Financial distress is a situation where a more likely to engage in tax aggressive behavior
company's operating cash flow is insufficient to in order to reduce their tax burden. This is
meet current obligations, which forces the because these companies typically have high
company to take corrective action (Arifin, 2018: levels of fixed assets, which can be difficult to
189). This situation generally, forces the transfer to low-tax jurisdictions or to revalue in
company's management to do everything order to reduce their tax liability. in research
possible to minimize the cost burden that must (Prastiwi & Maulidah, 2019) Capital Intensity
be incurred so as not to further complicate the negatively affects Tax Aggressiveness This
situation of the company, wrong one is by acting explains that the more high capital intensity in a
more aggressively on taxes given that taxes company, then for efforts aggressiveness
include fees that can be reduced. The funds corporate tax will be lower, When the capital
obtained from these tax savings can later be used intensity of a company is high, this indicates that
by the company to pay debts or other obligations the amount of expenses The depreciation
and can be used as capital to fund current inherent in the assets of the enterprise is also
operations. This is in line with research conducted high, so for the practice of aggressiveness the
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Influence on Tax Aggressiveness In Indonesia (2023) x-xx

corporate tax becomes low. In contrast to 189). This situation generally, forces the
research (Mustika, 2017) which says that Capital company's management to do everything
Intensity does not affect the company's possible to minimize the cost burden that must
aggressiveness, this is because the Company be incurred so as not to further complicate the
invests with fixed assets aimed at so that fixed situation of the company, wrong one is by acting
assets are used for the operation of the company more aggressively on taxes given that taxes
and the investment of the company not for tax include fees that can be reduced. The funds
aggressiveness activities. obtained from these tax savings can later be used
While financial distress and capital by the company to pay debts or other obligations
intensity can increase the risk of tax aggressive and can be used as capital to fund current
behavior, Inventory intensity is a part of capital operations. This is in line with research conducted
intensity which is the ratio of investment activity by Nugroho, Sutrisno and Mardiati (2020) and
carried out by the company in the form of Jaffar, Chek and Roshaiza (2021) which show that
inventory. According to Saputro et al. (2018) financial distress affects tax aggressiveness.
Inventory intensity is the ratio that can be used to Companies that are in financial distress may be
measure how much inventory is invested in more likely to engage in tax aggressive behavior
company. Companies that have high inventories to reduce their tax liability and improve their
will have high load or costly to set up those financial position. This can include activities such
supplies. With there are additional costs or costs as transferring profits to low-tax jurisdictions or
arising from the investment inventories are using complex tax structures to reduce taxable
recognized as an expense in the period in which income. However, such practices can also
the additional costs are incurred, then the increase the risk of legal and reputational
additional costs incurred will reduce the damage. Financial distress causes operational
company`s profits, so that the amount of the tax activities not to run smoothly, to run its business a
burden to be paid by the company can be company needs working capital to finance its
reduced the number becomes smaller. Research activities, management will try to find a way to run
conducted by Saputro et al. (2018) shows that its operations by way of obtaining debt For this
inventory intensity significant positive effect on tax reason, the company will seek to manipulate
aggressiveness by proxy ETR. This is because revenues in order to tax the paid less, if this is
companies that have high inventories will incur done continuously then the company will be
losses additional burden to reduce the company's perceived as tax aggressiveness. This statement is
tax burden. While Damayanti & Gazali (2018) in in line with research conducted by Swandawi &
their research shows that inventory intensity has Noviari (2020) and Sadijarto et al. (2020), which
no significant effect on tax aggressiveness. This is states that financial distress has a positive impact
caused by inventory turnover different company on tax aggressiveness (tax avoidance). Based on
every year. In addition, the company's inventory the explanation above, researchers predict the
on basically more used to increase the value of influence of companies experiencing financial
company sales. distress on tax aggressiveness.
2. THEORETICAL FRAMEWORK AND
Capital Intensity is also a factor that affects Tax
HYPOTHESIS DEVELOPMENT
Aggressiveness, Companies that have high levels
Some of the factors that can affect tax
of capital intensity, such as those in the
aggressiveness in a company are first financial
manufacturing or mining sectors, may also be
distress. Financial distress is a situation where a
more likely to engage in tax aggressive behavior
company's operating cash flow is insufficient to
in order to reduce their tax burden. This is
meet current obligations, which forces the
because these companies typically have high
company to take corrective action (Arifin, 2018:
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Influence on Tax Aggressiveness In Indonesia (2023) x-xx

levels of fixed assets, which can be difficult to tax aggressiveness. This is caused by inventory
transfer to low-tax jurisdictions or to revalue in turnover different company every year. In
order to reduce their tax liability. in research addition, the company's inventory on basically
(Prastiwi & Maulidah, 2019) Capital Intensity more used to increase the value of company
negatively affects Tax Aggressiveness This sales.
explains that the more high capital intensity in a
Based on the description above, it can be
company, then for efforts aggressiveness
concluded that in reality, there are still many
corporate tax will be lower, When the capital
companies that carry out tax aggressiveness that
intensity of a company is high, this indicates that
has an impact on company value. The existence
the amount of expenses The depreciation
of phenomena related to tax aggressiveness as
inherent in the assets of the enterprise is also
described above attracts the author's interest in
high, so for the practice of aggressiveness the
researching problems related to tax
corporate tax becomes low. In contrast to
aggressiveness. the purpose of this study itself is
research (Mustika, 2017) which says that Capital
to re-examine the variables that are factors that
Intensity does not affect the company's
influence tax aggressiveness. This study
aggressiveness, this is because the Company
contributes to provide the evidence regarding
invests with fixed assets aimed at so that fixed
what factors that influence the tax aggressiveness
assets are used for the operation of the company
based on the agency theory. the results of this
and the investment of the company not for tax
study are expected to provide information as a
aggressiveness activities.
basis consideration, support, and thought
While financial distress and capital intensity can contributions for further researchers in order to
increase the risk of tax aggressive behavior, be able to develop this research by examining
Inventory intensity is a part of capital intensity several factors that have not been tested.
which is the ratio of investment activity carried out
Several studies on coping strategy among
by the company in the form of inventory.
manufacturer’s sectors has been conducted by
According to Saputro et al. (2018) Inventory
many researchers (Ni Luh Putri Setyastrini, Imam
intensity is the ratio that can be used to measure
Subekti, and Arum Prastiwi,2019) Because this
how much inventory is invested in company.
research aims to analyze and find empirical
Companies that have high inventories will have
evidence of the impact of financial distress, capital
high load or costly to set up those supplies. With
intensity, and inventory intensity on tax
there are additional costs or costs arising from the
aggressiveness practices in companies in the Basic
investment inventories are recognized as an
materials and Chemical industry sector listed on
expense in the period in which the additional
the IDX in 2019-2021.
costs are incurred, then the additional costs
incurred will reduce the company`s profits, so that Financial distress is the condition of a company
the amount of the tax burden to be paid by the that is unable to generate enough income, so it
company can be reduced the number becomes cannot meet or pay its financial obligations.
smaller. Research conducted by Saputro et al. Financial conditions are severe and prolonged
(2018) shows that inventory intensity significant financial difficulties that can lead to and lead to
positive effect on tax aggressiveness by proxy liquidation or bankruptcy. Swandawi & Noviari
ETR. This is because companies that have high (2020) and Sadijarto et al. (2020) conducted
inventories will incur losses additional burden to research on tax aggressivenss state that the
reduce the company's tax burden. While higher degree of financial distress is, the higher
Damayanti & Gazali (2018) in their research shows degree of tax aggressiveness becomes. which
that inventory intensity has no significant effect on states that financial distress has a positive impact

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on tax aggressiveness (tax avoidance). Based on The sample research method used in this study is
the explanation above, researchers predict the the purposive sampling method. That is by
influence of companies experiencing financial selecting samples based on certain criteria in
distress on tax aggressiveness. Thus, the first accordance with the research objectives. The type
hypothesis of the study is: of data used in this study is quantitative data. The
data sources used are secondary data obtained
H1: Financial distress affects tax aggressiveness. from annual reports and performance summaries
that are routinely published by Basic materials
Capital Intensity is how much a company invests
and Chemical industry sector companies that
its assets in the form of fixed assets and
listed on the IDX in 2019-2021. with one hundred
inventories. In this study, capital intensity will be
corporations in total. The sampling technique
proxied with the intensity of fixed assets.
used is the purposive sampling technique, which
According to Hanum (2013) in (Ariyani et al.,
is the technique to determine the sample using
2019) if the amount of fixed assets in a company
certain considerations. The criteria for the
is getting bigger, the depreciation expense will be
corporationsthat will be sampled are (1) Basic
greater and will result in profit before corporate
materials and Chemical industry sector companies
taxes will be reduced. If the profit before tax is
that listed on the IDX in 2019-2021. (2) Basic
reduced, it will result in the taxable income also
materials and Chemical industry sector companies
becoming smaller or reduced. Research (Prastiwi
which is presented on the main board of the
& Maulidah, 2019) says that Capital Intensity has a
stock list that listed on the IDX in 2019-2021.
negative influence on corporate tax
Tax aggressiveness is calculated using the
aggressiveness. This study explains that if the
effective tax rate (ETR) to measure tax
Capital Intensity in the company increases, it will
aggressiveness. The higher ETR, the lower the
be inversely proportional to the efforts of
level of aggressiveness of tax (Neifar & Utz, 2019).
corporate tax aggressiveness that decreases. With
Total ETR as the ratio of total income tax expense
the larger the company's assets, the greater the
to book income before tax with the following
depreciation costs and the taxes owed will be
formulation:
smaller. The second hypothesis of the study is:
tax expense
H2: Capital Intensity affects tax aggressiveness ETR= × 100 %
pre tax book income
Inventory intensity is a ratio that describes how
many companies invest in inventory. Companies
Independent variables of this study are
that invest in inventory in warehouses will result in
financial distress, capital intensity, and inventory
the cost of maintaining and storing inventory. The
intensity. Financial distress in this study is
high level of inventory intensity will increase the
measured by using the Modified Altman model,
burden on corporations. Thus, it will reduce
which is used by Amalia Ahdiyah and Dedik Nur
company profits which will also cause the tax
Triyanto (2021) as follows:
burden to be smaller. Companies that tend to do
ZScore=6 , 56 X 1+3 , 26 X 2+6 , 72 X 3+ 1, 05 X 4
tax avoidance are those that have a high degree
Description:
of inventory intensity. So, if the company's
X1= Working Capital / Total Asset
inventory intensity is high it will result in a higher
X2= Retained Earnings / Total Asset
level of tax aggressiveness. This is in line with
X3= Earnings Before Interest And Taxes /
research done by Dharma & Noviari (2017), which
Total Asset
states that inventory intensity has a positive
X4= Book Value/Total Liabilities
impact on tax aggressiveness (tax avoidance). The
Criteria that are used to forecast the
last hypothesis of the study is:
corporation’s financial difficulties using the Altman
H3: Inventory Intensity affects tax aggressiveness.
Modification model:
Z > 2.60 = Healthy corporation
3. RESEARCH METHODOLOGY 2.60 < Z < 1.10 = Grey area corporation

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Z < 1.10 = Potency towards bankruptcy 5 Total sample companies 81

corporation after outlier elimination

Referring to research conducted by Source:secondary data, processed (2023)

Gemilang, Desi Nawang (2016) capital intensity is The type of data used for this study is quantitative
measured using the formula:
data with secondary data forms. The data used is
Capital Intensity=Total ¿ Asset ¿
Total Asset sourced from IDX or the official website of each
In this study, inventory intensity is sample company where data is obtained from
assessed by comparing the total inventory with Financial Statements, Annual Reports, and
total assets. Inventory intensity can be measured Sustainability Reports.
by the formula used by Andhari & Sukartha
Table 2. Statistics descriptive test result
(2017) as follows :
Variables Mi Ma Mean Std.
Total Inventory n x Deviatio
Inventory Intensity =
Total Asset n

4. RESULTS AND DISCUSSIONS Tax - .91 -.0790 .34765

This study uses quantitative research using Aggressivenes 1.0
secondary data. This research was conducted by s 5
taking the population of companies in the basic
Financial -.3 7.8 2.274 1.89698
materials and chemical industry sector listed on
Distress 3 7 3
the Indonesia Stock Exchange. In this study, the
method used is the purposive sampling method. Capital .01 .85 .4053 .22916
The criteria used for sample decision making in Intensity
this study are include:
Inventory .00 1.2 .1598 .18323
Table 1. Sample Research Intensity 5

No Criteria Number of Source: Secondary data processed using SPSS

Companies 29.0.1.0

1 Number of companies in 100 Table 2 shows the results of descriptive statistics,

the basic materials and with a total sample of 81 companies known that
chemical industry sector tax aggressiveness (Y) has a minimum value of -
listed on the Indonesia 1.05 and a maximum value of .91 Overall, the
Stock Exchange during basic materials and chemicals industry sector
2019-2021 companies are in the gray area corporation
because based on the Altman Z-Score approach,
2 Basic materials and (35)
the company has 2.2743, which means Z values is
chemical industry sector
less than 2.60 and more than 1.10. Capital
companies listed on the
intensity has a minimum value of .01 and a
main board of the
maximum value of .85 while Inventory intensity
Indonesia Stock Exchange
has a minimum value of .00 and a maximum
stock list during 2019-2021
value of 1.25
3 Total sample of companies 105
Classical Assumption Test
(35 x3)
Table 3. Classical Assumption Test Results
4 Data outliers (24)
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Variable Dependent Variable explained by other variables outside the

regression model.
Tax Aggressiveness
Statistical Test F
Tolerance
Table 5. Statistical test Results F
Financial Distress (FIND) .979
Model F. Sig.
Capital Intensity (CAPI) .977
Regression 3.130 .030b
Inventory Intensity (INVI) .959
Residual
Durbin-Watson
Total
Based on the table above, it can be seen that
there are no symptoms of autocorrelation Table 5. shows that the regression model has a
because, in the multicollinearity test, each variable significance of 0.030 or below the significant level
has a Variance Inflation Factor (VIF) value of less of 0.05. Therefore, the hypothesis that Financial
than 10.00. That is, the VIF values of each variable distress has an effect on tax aggressiveness is
are 1.022, 1.024, 1.043, respectively. In addition, accepted, but for the hypothesis capital Intensity
the tolerance values of environmental, and Inventory Intensity disclosure has an effect on
governance, social, and company age variables Tax Aggressiveness are rejected.
were .979,977 and .959 respectively where these
Table 6. Statistical Test Result T
values were greater than 0.100 so that the
regression model in this study did not contain Unstand Coeffi Standar t Si
symptoms of multicollinearity. ardized cients dized g.
B Std. Coeffici
Based on table (2) shows that the three regression
Error ent
models have met the normality assumption
Beta
marked by a significant level greater than the
reference significance, namely 0.05 (α = 5%). (Cons -.121 .100 - .2
Furthermore, the heteroscedasticity test, with a tant) 1.2 27
significant level showing values above 0.05 (α= 17
5%) can be declared free from heteroscedasticity.
FIND -.045 .020 -.246 - .0
2
Coefficient of determination (R ) 2.2 26
67
Table 4. Coefficient of Simultaneous
Determination CAPI .248 .165 .163 1.5 .1
00 38
Model R Square Adjusted R Std. Error
Square of the INVI .279 .208 .147 1.3 .1
Estimate 41 84

1 .109 .074 .33454 Source: Secondary data processed using SPSS

29.0.1.0
In Table 4. this regression model has an Adjusted
R Square value of 0.074 or 74%. This means that Based on the table above, the regression
74% of the variation in the dependent variable equation can be made as follows:
Tax Aggressiveness can be explained by the
Y =−.121±.045 X 1−.248 X 2−.279+ e
independent variable, while the remaining 26% is

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The results of the t-test above show that FIND has The results of the t-test above show that CAPI has
a value of 0.026. The value has a value below the a value of 136. The value has a value above the
significance of 0.05 which states that the result significance of 0.05 which states that the result
indicates that the proposed H1 hypothesis is indicates that the proposed H2 hypothesis is
accepted. This shows that Financial distress affect rejected. This shows that the capital intensity
the Tax Aggressiveness of companies, especially variable has no effect on tax aggressiveness at the
in basic industries and chemical sector that listed significance level α = 5%, so the hypothesis is
in the main board of the IDX stock list from 2019 rejected. A negative coefficient means that the
to 2021 . The results of Amalia Ahdiyah and Dedik higher the number of independent
Nur Triyanto (2021) research found that the commissioners, the less likely the company is to
financial distress variable has no significant effect exercise Tax Aggressiveness as the value of the
on tax aggressiveness at the significance level α = ETR increases.
5%, so the hypothesis is rejected. Means the
The results of the t-test above show that INVI has
positive coefficient the higher the number of
a value of 184. The value has a value above the
percentage of shares owned by the institution, the
significance of 0.05 which states that the result
less likely the tax aggressiveness of the company
indicates that the proposed H3 hypothesis is
is because the value of the ETR is increasing.
rejected. This shows that the Inventory Intensity
The results of this study are in line with the theory variable does not have a significant effect on Tax
of legitimacy, where companies in maintaining Aggressiveness at the level of significance α = 5%,
their continuity always try and try to gain so the hypothesis is rejected. A negative
recognition or legitimacy from the community, coefficient means that the higher the Capital
both employees, investors, clients, partners, and Intensity, the more likely a company is to perform
so on. So that when the company is in a state of higher Tax Aggressiveness as its ETR value
financial distress, the company will do everything decreases. These results align with research
possible to restore the company's financial conducted by Sukartha (2017), which shows that
condition including tax avoidance measures in shows inventory intensity has no significant
order to continue to get recognition and be able impact upon tax aggressiveness.
to maintain the company's life. Limited choice in
times of financial distress will make companies
5. CONCLUSSION [Segoe UI, 12, BOLD,
take risks by doing tax aggressiveness and
UPPERCASE]
releasing the possibility of negative reputation.
The results of this study are also in line with the
Based on the results of data analysis and
agency theory where all parties, especially agents,
discussion on the t-test, it can be concluded that
are assumed to take actions to risk themselves.
financial distress has a significant effect on tax
Management will apply tax aggressiveness to
aggressiveness while Capital Intensity, and
overcome financial problems because it is still Inventory Intensity do not affect tax
bound by a contract with the principal which aggressiveness in companies in the basic
requires management to maintain the continuity materials and chemical industry sector listed on
of the company's performance. In addition, the the main board of the IDX stock list in 2019-2021.
treatment of tax aggressiveness in times of This study also has several limitations, including:
financial distress will make management reports this research is only limited to secondary data
still look good in the accountability of from companies in the basic materials and
management performance results to investors, chemical industry sectors listed on the main
thus impacting the returns or bonuses that will be board of the IDX stock list in 2019-2021.
obtained by the agent. Therefore, the author's suggestion to the next

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Influence on Tax Aggressiveness In Indonesia (2023) x-xx

researcher is to expand the sample either by many tax avoidance actions that will reduce tax
means of increasing the years of observation so revenue.
that it will give a greater number of samples and 2. For Companies For companies, this research is
the possibility of obtaining actual conditions, and expected to be a consideration not to take tax
it is advisable to use other independent variables avoidance actions that can harm the state,
such ROA, Leverage, etc. to measure tax because according to the research results, a large
aggressiveness, and different objects of study. percentage of managerial and concentrated
ownership has a high share in making company
6. IMPLICATIONS AND LIMITATIONS policies related to tax avoidance. Unlike other
This research has limitations in the research ownership structures, where the results are not
process, among others as following: significant, there is still the possibility of
1. The observation period is only two years, companies with government ownership
namely from 2020 to 2021, structures, and institutional ownership structures
2. In this study, not all manufacturing doing tax avoidance. The family ownership
companies on the IDX were used as a structure and foreign ownership structure based
sample because the researcher used deep on the results of this study show that the two
purposive sampling ownership structures are the greater the
The results of this study are expected to percentage, the tax avoidance that occurs may be
contribute well to the government, companies, or smaller, but because it is not significant, there is
further researchers, namely: still the possibility of companies doing tax
1. For the Government This research is expected avoidance. Therefore, it is recommended that
to provide important input so that the companies with family ownership structures, 140
government tightens more in making tax managerial ownership structures, government
regulations so that there is no "gray area" for ownership structures, institutional ownership
companies to carry out tax avoidance actions. The structures, foreign ownership structures, and
results of this study show that the managerial concentrated ownership structures pay more
ownership structure using ETR and CETR proxies attention to every decision taken in order to
has a significant positive effect on tax avoidance, minimize the occurrence of tax avoidance actions
it can be interpreted that the greater the number that can harm the state, these shareholders can
of managerial ownership will be the greater the strengthen their control and supervisory
likelihood of tax avoidance, it can be concluded functions towards management in running the
that companies that have a high proportion of company.
managerial ownership, it can be possible that 3. For Further Researchers For the next
management policies on tax avoidance researcher, it is hoped that they can gain
will increase. As for concentrated ownership, the additional insights related to the factors that
results of this study show that using concentrated influence the behavior of tax avoidance. This
ownership ETR proxies has a significant positive research was developed from the research of
relationship with tax avoidance, but not
significantly when using CETR proxies it can
inform that it is possible for companies with a
high proportion of concentrated ownership, 139 (Ahdiyah & Triyanto, n.d.; Yuliana et al., 2021; Alkausar et al., 2
there is a high probability of management policies
to engage in tax avoidance. It is recommended
that the government be more incentivized in
supervising companies with a proportion of
managerial ownership and concentrated in Results obtained from previous researchers have
carrying out tax rules because it is possible that not been consistent. This study develops the
both types of ownership structures will carry out results of suggestions from previous research,

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Influence on Tax Aggressiveness In Indonesia (2023) x-xx

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