PENGARUH PROFITABILITAS & LEVERAGE TERHADAP TAX AVOIDANCE DENGAN POLITICAL CONNECTION SEBAGAI PEMODERASI

Abstract

This study aims to determine the effect of profitability and leverage on tax avoidance with political connections as a moderator. The population of this study is 271 manufacturing companies in Indonesia. The number of samples in this study is 90 companies determined by purposive sampling. The research method used is a quantitative approach with multiple linear regression analysis using the SPSS 26 program. The results of this study indicate that profitability has a positive effect on tax avoidance. When profits increase, the amount of income tax will also increase in proportion to the increase in business profits, so that business actors tend to do tax avoidance so as not to increase the tax burden. Leverage has a negative effect on tax avoidance, the high or low level of debt does not affect the company's tax avoidance. The more debt a company has, the more careful the managers are and the less risk that can harm the company through tax avoidance. Political connections can moderate the positive effect between profitability and tax avoidance. The higher the political connection of a company will increase the company's profitability performance to do tax avoidance. Companies that have political connections are protected by the government, have easier access to capital loans, and face lower risks during tax audits. Political connection cannot moderate the negative effect between leverage and tax avoidance. Companies that have a lot of debt tend to maintain a good reputation in the eyes of creditors by not doing tax avoidance. Companies choose not to take advantage of existing political connections to minimize their tax burden. Further researchers are advised to add samples and/or variables that are different from this study.

Keywords: Profitability, leverage, political connection, tax avoidance.