THE EFFECT OF GOOD CORPORATE GOVERNANCE ON TAX AVOIDANCE WITH SUSTAINABILITY REPORT AS A MODERATING VARIABLE

Abstract

ABSTRACT
This research focuses on the aim of obtaining empirical evidence on the influence of Good Corporate Governance (GCG) on tax avoidance, by adding sustainability reports as a moderating variable. Supported by 4 independent GCG variables, 2 from external factors and 2 from internal factors. Internal factors are proxied by managerial ownership and institutional ownership, while external factors are proxied by audit committee and independent board of commissioner. Apart from that, 2 control variables are added, namely leverage and firm size. Data collection in this research used purposive sampling method on companies listed on the Indonesia Stock Exchange (IDX) in the energy and basic materials sectors from 2021 to 2023 and collected 185 samples. Secondary data and Moderation Regression Analysis (MRA) analysis techniques were used in this research. The findings of the research indicate that the audit committee has an effect on tax avoidance, then the results of testing the control variables showed that leverage has a positive effect while firm size has a significant negative effect on tax avoidance. In additions, this research reveals that sustainability reports are able to act as moderator in influencing audit committee on tax avoidance, thus strengthening the influence of audit committees on tax avoidance. Meanwhile, managerial ownership, institutional ownership, independent board of commissioners, and sustainability reports have no effect on tax avoidance practices. The result of this analysis is that more regular and reliable GCG implementation minimizes tax avoidance practices. The existence of an audit committee can help independent commissioners to improve supervision of company management, and disclosure of sustainability aspects in the sustainability report reduces company management activities, one of which is tax avoidance activities. Companies that declare their social responsibility, namely paying taxes fairly, have a low level of tax avoidance.

Keywords : managerial ownership, institutional ownership, audit committee, independent board of commissioners, sustainability report, tax avoidance