Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period)
Tax compliance remains a critical issue in corporate taxation research, particularly in understanding the causal link between the administration of corporate tax and tax avoidance. This study investigates the potential simultaneous relationship between the two by analyzing 277 listed firms across fo...
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MDPI AG
2025-07-01
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| Series: | Economies |
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| author | Arie Pratama Kamaruzzaman Muhammad |
| author_facet | Arie Pratama Kamaruzzaman Muhammad |
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| description | Tax compliance remains a critical issue in corporate taxation research, particularly in understanding the causal link between the administration of corporate tax and tax avoidance. This study investigates the potential simultaneous relationship between the two by analyzing 277 listed firms across four Southeast Asian countries using two-year average data (2022–2023). The administration of corporate tax is measured using eight disclosure-based indicators from the Refinitiv Eikon database, while tax avoidance is proxied by the effective tax rate (ETR). The primary analysis applies multiple regression to assess the effect of tax administration on tax avoidance and logistic regression to evaluate the reverse relationship. To address endogeneity and test for simultaneity, robustness checks using two-stage least squares (2SLS) and instrumental variable techniques are employed. The results confirm a bidirectional relationship: a stronger administration of corporate tax is associated with lower tax avoidance, while tax avoidance behavior also shapes tax administration practices. These findings underscore the importance of strengthening internal tax governance as a foundation for compliance. Given varying levels of tax administration across countries, this study calls for greater international coordination to standardize corporate tax governance practices and reduce avoidance incentives. |
| format | Article |
| id | doaj-art-df0fadee2a054f8b834592720cbe7ce0 |
| institution | Matheson Library |
| issn | 2227-7099 |
| language | English |
| publishDate | 2025-07-01 |
| publisher | MDPI AG |
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| series | Economies |
| spelling | doaj-art-df0fadee2a054f8b834592720cbe7ce02025-07-25T13:20:29ZengMDPI AGEconomies2227-70992025-07-0113719410.3390/economies13070194Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period)Arie Pratama0Kamaruzzaman Muhammad1Department of Accounting, Faculty of Economics and Business, Universitas Padjadjaran, Bandung 40132, IndonesiaFaculty of Accountancy, Universiti Teknologi MARA Cawangan Selangor, Puncak Alam 42300, MalaysiaTax compliance remains a critical issue in corporate taxation research, particularly in understanding the causal link between the administration of corporate tax and tax avoidance. This study investigates the potential simultaneous relationship between the two by analyzing 277 listed firms across four Southeast Asian countries using two-year average data (2022–2023). The administration of corporate tax is measured using eight disclosure-based indicators from the Refinitiv Eikon database, while tax avoidance is proxied by the effective tax rate (ETR). The primary analysis applies multiple regression to assess the effect of tax administration on tax avoidance and logistic regression to evaluate the reverse relationship. To address endogeneity and test for simultaneity, robustness checks using two-stage least squares (2SLS) and instrumental variable techniques are employed. The results confirm a bidirectional relationship: a stronger administration of corporate tax is associated with lower tax avoidance, while tax avoidance behavior also shapes tax administration practices. These findings underscore the importance of strengthening internal tax governance as a foundation for compliance. Given varying levels of tax administration across countries, this study calls for greater international coordination to standardize corporate tax governance practices and reduce avoidance incentives.https://www.mdpi.com/2227-7099/13/7/194tax administrationtax avoidanceSoutheast Asiasimultaneous equation |
| spellingShingle | Arie Pratama Kamaruzzaman Muhammad Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period) Economies tax administration tax avoidance Southeast Asia simultaneous equation |
| title | Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period) |
| title_full | Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period) |
| title_fullStr | Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period) |
| title_full_unstemmed | Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period) |
| title_short | Optimizing Tax Compliance: Understanding the Link Between Company Tax Administration and Tax Avoidance (A Survey of Public Companies in Indonesia, Malaysia, Singapore, and Thailand for the 2022–2023 Period) |
| title_sort | optimizing tax compliance understanding the link between company tax administration and tax avoidance a survey of public companies in indonesia malaysia singapore and thailand for the 2022 2023 period |
| topic | tax administration tax avoidance Southeast Asia simultaneous equation |
| url | https://www.mdpi.com/2227-7099/13/7/194 |
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