The Effect of Sales Growth and Fixed Asset Intensity on Tax Avoidance with Institutional Ownership
756 Return: Study of Economic And Business Management, Vol 2 (8), August 2023
Unlike countries that consider taxes as profitable, taxpayers actually see taxes as an
obligation that can reduce company assets for the benefit of the state (Irawati et al., 2020). Taxes
are considered a burden that can reduce the profits and income of economic activity actors (Nindita
& Budi, 2022). The perspective of taxpayers has led to the rampant practice of tax avoidance among
business people who aim to reduce the amount of tax burden that will be paid to the state.
Companies will try to find weaknesses in existing regulations and then take appropriate business
steps to reduce the tax burden. These measures are known as tax avoidance measures (Rahmawati
et al., 2016).
Similar tax avoidance practices have also occurred in Indonesia, namely in the company
PT Bentoel Internasional Investama. The British American Tobacco (BAT)-owned company is
claimed to have made an economic contribution to offset the enormous health costs. As reported
by the Tax Justice Network Institute on (Kontan.co.id, 2019) that BAT has diverted most of its
revenue out of Indonesia using two ways, namely: through intra-company loans between 2013
and 2015 and the second way through repayments back to the UK for royalty, fee and service
payments. Bentoel took many loans from his Dutch affiliate Rothmans Far East BV on the
grounds of financing bank debt and paying for the purchase of machinery and equipment. In
addition, Bentoel also makes payments back to the UK for royalties, fees and IT costs at a rate of
US $ 19.7 million per year. Both of these significantly exacerbated Bentoel's losses in Indonesia.
In fact, these two costs are equivalent to 80% of the losses suffered by Bentoel before 2016.
Tax avoidance practices are generally initiated by company managers to meet the
expectations of shareholders. Managers try to get the largest profit figures in the financial
statements because the greater the profit reported in the financial statements, the greater the
reciprocity that managers will receive from company owners. Management no longer carries out
tax responsibilities as it should because their personal interests take precedence over the public
interest, especially the public. Seeing how the state is so ambitious in its efforts to increase tax
revenues to support state growth due to the need for greater state costs and financial support from
taxpayers is one way out that is expected to save the country from the economic crisis. A much
different perspective can be found from the side of companies that are now facing an onslaught
of economic problems and are faced with the possibility of an increasingly real recession. Various
efforts are made by the company in order to maintain existence in the business world. Both
statements will encourage more tax avoidance cases in the future. Until now, tax avoidance is still
a problem that is growing every day and is the concern of economic actors in the world, especially
Indonesia. This then prompted the author to conduct further research on tax avoidance.
Tax avoidance is driven by various factors, including the amount of company debt, high
profits, and an increase in sales received (Arinda &; Dwimulyadi, 2019). In essence, every
company certainly has the same goal, which is to pursue maximum profits, especially in
companies that are experiencing an increase in sales. The company will certainly try to keep sales
growth always leading to positive and better things. When the company has high sales, of course,
the profit received will also increase so that the tax responsibility owned becomes greater (Nugraha
& Mulyani, 2019). Companies with rapid sales growth certainly need large financial support to
fund this growth. This causes companies to tend to carry out tax avoidance to reduce the amount
of tax burden that must be paid to the state and increase profits to be allocated to efforts to increase
company investment. Based on the results of research from (Nugraha & Mulyani, 2019) it is stated
that sales growth or sales growth has a positive effect on tax avoidance. Similar results were also
obtained from research (Januari & Suardikha, 2019), namely that sales growth has a positive effect
on tax avoidance. Another case with research conducted by (Irawati et al., 2020) which concluded
that sales growth has a significant negative effect on tax avoidance. However, the results of the
study (Astuti et al., 2020) shows the opposite, namely that sales growth has no effect on tax
avoidance. Various inconsistencies arising from the results of previous research cause sales
growth to need further investigation.
Taxes as the largest contributor to state tax revenue to date cause research on taxes is always
interesting to investigate. The amount of fiscal effort in dispelling tax avoidance practices
encouraged researchers to conduct this study. This research is expected to provide input to the