Direct and indirect influence of corporate governance on aggressive tax avoidance and participation in the tax amnesty program

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

Corporate governance (CG) is widely believed to prevent management from engaging in harmful actions that could adversely affect the company. A company is expected to perform better if its CG index or value is high. However, facts indicate that not all companies with a high CG index also demonstrate good performance (AlHares & AlBaker, 2023). The issue addressed in this research is the mixed findings regarding tax compliance and CG. Some studies indicate a negative impact of CG, while others show the opposite results. This study aims to examine the influence of CG on tax compliance and participation in tax amnesty programs, which are believed to enhance taxpayers’ compliance in the future. The method employed in this research is multiple regression analysis with tax compliance as the intervening variable. Test results show that the CG index has a negative impact on aggressive tax avoidance abnormal books tax difference (ABTD). These findings suggest that CG can prevent companies from committing tax violations. The research also discovered that CG does not directly influence a company’s participation in the tax amnesty program in Indonesia. Instead, CG indirectly affects participation in the tax amnesty program through aggressive tax avoidance.

Keywords: Corporate Governance, Aggressive, Tax Amnesty, Avoidance

Authors’ individual contribution: Conceptualization — T.E.J., M.W.Z., P.S.K., and P.M.J.L.; Methodology — T.E.J., M.W.Z., and P.S.K.; Validation — T.E.J., M.W.Z., P.S.K., and P.M.J.L.; Formal Analysis — T.E.J., M.W.Z., P.S.K., and P.M.J.L.; Investigation — T.E.J., M.W.Z., and P.S.K.; Data Curation — T.E.J.; Writing — Original Draft — T.E.J.; Writing — Review & Editing — T.E.J., M.W.Z., P.S.K., and P.M.J.L.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, H21, H25, H26

Received: 11.12.2023
Revised: 08.03.2024; 04.03.2025
Accepted: 10.03.2025
Published online: 12.03.2025

How to cite this paper: Jaya, T. E., Zarkasyi, M. W., Koeswayo, P. S., & Liberty, P. M. J. (2025). Direct and indirect influence of corporate governance on aggressive tax avoidance and participation in the tax amnesty program [Special issue]. Journal of Governance & Regulation, 14(1), 433–441. https://doi.org/10.22495/jgrv14i1siart19