The Effect of Financial Performance and Company Size on Tax Aggressiveness

Abstract

Taxes are the primary source of state revenue, playing a crucial role in financing development and improving public welfare. Although tax revenue realization in Indonesia continues to increase, the government still faces challenges in the form of tax aggressive practices by companies through tax avoidance and evasion to minimize the tax burden. This practice is triggered by a conflict of interest between companies oriented towards maximizing profits and the government's efforts to optimize state revenue. Factors such as profitability, leverage, and company size are thought to influence the tendency of companies to engage in tax aggressiveness. High profitability encourages companies to manage profits to lower tax burdens, leverage provides tax reduction benefits through debt interest expenses, while large companies have greater resources and complexity in tax planning. This study aims to analyze the effect of financial performance and company size on tax aggressiveness in food and beverage companies listed on the Indonesia Stock Exchange. The study population is 26 manufacturing companies in the food and beverage subsector listed on the Indonesia Stock Exchange (IDX) for the 2021–2023 period, selected through a purposive sampling method. This study uses quantitative methods with secondary data obtained from sustainability reports and annual reports. The data were analyzed using multiple linear regression with the help of IBM SPSS 27. The results showed that profitability influences corporate tax aggressiveness, while company size does not.