Impact of profitability, sales growth, and solvency on tax avoidance in non-cyclical consumer manufacturing firms

Abstract

Purpose: This study aims to examine the impact of profitability, sales growth, and solvency on tax avoidance in consumer non-cyclical manufacturing companies listed on the Indonesia Stock Exchange from 2017 to 2019.

Methods: A quantitative research method was employed using secondary data, with a purposive sampling technique to select the sample. Data analysis involved descriptive statistics, classical assumption tests (normality, multicollinearity, autocorrelation, and heteroscedasticity), panel data regression analysis, and hypothesis testing using EViews Version 10.

Findings: The results indicate that profitability and sales growth negatively affect tax avoidance, while solvency has a positive effect. These findings suggest that higher profitability and sales growth reduce tax avoidance tendencies, whereas higher solvency increases them.

Practical Implications: The findings provide insights for policymakers and corporate managers to enhance tax compliance and optimize financial decision-making in the manufacturing sector. Understanding these factors can help companies formulate better tax strategies while maintaining regulatory compliance.