The Influence of Tax Payment Disclosure in GRI-Based Sustainability Reports on Tax Avoidance: A Cross-Country Analysis of Indonesia and Singapore

Toly, Agus Arianto and ONGGARA, CLOVIZ NOZA and KRISTIAN, SAMUEL (2024) The Influence of Tax Payment Disclosure in GRI-Based Sustainability Reports on Tax Avoidance: A Cross-Country Analysis of Indonesia and Singapore. In: Brawijaya International Conferene on Finance and Capital Market, 02-11-2024 - 02-11-2024, Kuala Lumpur - Malaysia.

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Abstract

This study aims to analyze the impact of tax disclosure in GRI-based sustainability reporting on tax avoidance in companies listed on the stock exchanges of Indonesia and Singapore during the period 2014-2023. Utilizing panel data and a fixed effects model, this study explores the relationship between tax payment disclosure in sustainability reporting, company size, gross fixed assets, profitability, leverage, development level, CSR Mandatoriness, and the market-to-book ratio with the level of tax avoidance. The sample is categorized into three groups: the first group examines how tax disclosure in GRI-based sustainability reporting affected tax avoidance in different countries, the second group examines how a nations development level influences tax avoidance, and the third group investigates the impact of mandatory sustainability reporting on tax avoidance, offering a more limpid insight into the effects of sustainability reporting. The research uncovers distinct differences in tax avoidance strategies between developed and developing countries, emphasizing significant behavioural discrepancies linked to varying levels of development and CSR mandatoriness enforcement. The multiple regression analysis indicates that tax disclosure in GRI-based sustainability reporting negatively relates to tax avoidance in developing countries. Furthermore, the test result also shows a positive relationship between CSR mandatoriness and development levels with tax avoidance in Indonesia and Singapore. This study offers practical insights for designing ethical and effective tax strategies, considering the contrasting tax practices between developed and developing nations and the influence of mandatory reporting.

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