The Effects of Financial Motives towards Corporate Tax Avoidance: Evidence from Public Listed Companies in Malaysia

Siti Nasuha Muhmad, Mohd Hassan Che Haat, Roshaiza Taha, Norfadzilah Rashid and Siti Nurain Muhmad

The corporate tax avoidance is associated with the intention of companies to minimize their tax burden by adopting tax planning mechanisms. The fact that taxes take away a greater proportion of the firms’ pre-tax earnings and reduce the distributable profits could be a reason for the endless war against corporate tax avoidance. Thus, this study been conducted to understand the financial motives that might influence corporate tax avoidance activities among public listed companies in Malaysia. On this basis, this study using the longitudinal approach to analysed the relationship of financial motives which consists of capital intensity, return on asset, leverage, inventory intensity, research &development intensity, and financial distress towards the corporate tax avoidance level. The current study investigates 7,632 firm-years of public listed companies for the year 2002 to 2017.The results from the pooled OLS regression found that selected financial motives investigate in the current study have a significant relationship with corporate tax avoidance. Thus, the findings of this study could indicate the selected financial motives could be used as an indicator to identify aggressive tax avoidance in the capital markets.

Volume 12 | Issue 1

Pages: 161-166

DOI: 10.5373/JARDCS/V12I1/20201025