the impact of corporate tax planning on the financial

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PERFORMANCE OF TRANSPORTATION LISTED COMPANY IN INDONESIA

By

Arvin Enditya Putra 11609008

BACHELOR'S DEGREE in

ACCOUNTING

BUSINESS AND COMMUNICATION

SWISS GERMAN UNIVERSITY The Prominence Tower

Jalan Jalur Sutera Barat No. 15, Alam Sutera Tangerang, Banten 15143 - Indonesia

Revision after Thesis Defense on 18 January 2021

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STATEMENT BY THE AUTHOR

As a result of this, declare that this submission is my work. To the best of my knowledge, it contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.

Arvin Enditya Putra

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Student Date

Approved by:

Neneng Djuaeriah, S. Hut., M.COM

_____________________________________________

Thesis Advisor Date

Ir. Nurdayadi, MSc.

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Thesis Co-Advisor Date

Dr. Nila Krisnawati Hidayat, SE, MM

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Dean Date

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ABSTRACT

THE IMPACT OF CORPORATE TAX PLANNING ON THE FINANCIAL PERFORMANCE OF TRANSPORTATION LISTED COMPANY IN INDONESIA

By

Arvin Enditya Putra

Neneng Djuaeriah, S. Hut., M.COM, Advisor Ir. Nurdayadi, MSc., Co-Advisor SWISS GERMAN UNIVERSITY

Tax planning has a positive impact on the organization's cash flow. It can have adverse effects on the economy since the government is unable to collect enough taxes. These adverse effects on the economy will translate to the reduced financial performance of firms. This study aimed to find out the impact of corporate tax planning on the financial performance of transportation listed companies in Indonesia. This research uses multiple regression on panel data of a sample of 25 transportation listed company for the period from 2014 to 2018. This study's independent variables were corporate tax planning as part by current income tax expense divided by profit before tax. Another control variable is liquidity as measured by current ratio, firm size as measured by the natural logarithm of total assets and leverage as measured by long term debt divided by (shareholders equity + long term debt). Financial performance was the dependent variable and was measured by Return on Assets (ROA). The study results produced an R-square value of 0.052 which means that the four selected independent variables can explain about 5.2 percent of the variation in the financial performance of transportation listed companies in Indonesia. Otherwise, 94.8 per cent in the interpretation of financial performance was associated with other factors not covered in this research. The study also found that the independent variables had a weak correlation with financial performance (R=0.227). This study indicates that there is no significant effect on the

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financial performance of transportation listed company, especially Corporate Tax Planning, liquidity, size, and leverage.

Keywords: Tax Planning, Effective Tax Rate, Liquidity, Leverage, Capital Structure, Return on Asset, Firm Size

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DEDICATION

I dedicate this thesis work for myself, and for everyone who wants to know tax planning on transportation listed company in Indonesia.

.

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ACKNOWLEDGEMENTS

PRAISE and gratitude for the blessings of Allah SWT that are always abundant to the author, so that the author can complete the thesis Most importantly, thank you for the family who still support me "Graduated on time does not determine your success, you alone determine it" Thank you for trusting me. I thank all my classmates: Dhea, Pandu, Veren, Fachri, Vito and Alwin. Thank you for your 4-year trip, it is hard to be happy everyone together, thank you for your encouragement to me even though I fell behind all of you. Thank you for your jokes and pranks that keep me happy. You are the ones who keep me going, so thank you. Thanks also to my closest friends. Who always support and encourage to be better than before, especially for Syamil Ershad, Bimo Prasetyo, Abshar Naufan, Wenny Pricillia. Thank you for your help, motivation, times for your support.

I am forever grateful for my thesis advisor and co-advisor loves, who helped directly or indirectly during the making of this thesis:

1. Neneng Djuaeriah, S. Hut., M.COM 2. Ir. Nurdayadi, MSc.

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Table of Contents

STATEMENT BY THE AUTHOR ... 2

ABSTRACT ... 3

DEDICATION ... 6

ACKNOWLEDGEMENTS ... 7

LIST OF FIGURES ... 10

LIST OF TABLES ... 11

LIST OF APPENDIX ... 12

CHAPTER 1 - INTRODUCTION ... 13

1.1.BACKGROUND ... 13

1.1.1 Corporate Tax Planning ... 14

1.1.2 Financial Performance ... 15

1.1.3 Corporate Tax planning and Financial Performance ... 15

1.1.4 Transportation company listed in IDX ... 16

1.2.RESEARCH PROBLEMS ... 17

1.3.RESEARCH OBJECTIVES ... 17

1.4.SIGNIFICANCE OF THE STUDY ... 17

1.5.RESEARCH QUESTIONS ... 18

CHAPTER 2 - LITERATURE REVIEW ... 19

2.1DEFINITION OF TAX PLANNING ... 19

2.1.1 Type of tax planning ... 21

2.1.2 Strategy of tax planning ... 21

2.2DETERMINANTS OF FINANCIAL PERFORMANCE ... 22

2.2.1 Liquidity ... 22

2.2.2 Capital Structure ... 24

2.2.3 Ownership Structure ... 25

2.2.4 Firm size ... 26

2.3CONCEPTUAL FRAMEWORKS ... 28

2.4PREVIOUS STUDIES ... 29

Do Efficiency of Taxes, Profitability and Size of Companies affect debt? A Study of Companies Listed in the Indonesian Stock Exchange ... 30

2.5HYPOTHESES ... 33

CHAPTER 3 - RESEARCH METHOD ... 34

3.1SCOPE OF STUDY ... 34

3.1.1 Explanatory ... 34

3.2LOCATION AND TIME FRAME OF STUDY ... 35

3.3RESEARCH OBJECTS ... 35

3.4TYPE AND SOURCE OF DATA ... 35

3.5POPULATION AND SAMPLE ... 35

3.5.1 Population ... 35

3.5.2 Sample ... 35

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3.6RESEARCH VARIABLE ... 37

3.6.1 Dependent variable ... 37

3.7DATA ANALYSIS ... 38

3.7.1 Multiple regression analysis ... 38

3.7.2 Test of Significance ... 39

CHAPTER 4 – RESULT AND DISCUSSION ... 40

CHAPTER 5 – CONCLUSION AND RECOMMENDATION ... 49

5.1 CONCLUSION ... 49

5.2 RECOMMENDATION ... 49

REFERENCES ... 51

APPENDIX ... 53

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LIST OF FIGURES

Figures Page

Figure 1. The Conceptual Model ... 28 Figure 2. Heteroscedasticity Test ... 43

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LIST OF TABLES

Table Page

Table 1. Transportation Listed Company ... 36

Table 2. Research Variable ... 37

Table 3. Descriptive Statistics ... 40

Table 4. Kolmogorov-Smirnov Test ... 41

Table 5. Durbin Watson Test ... 41

Table 6. Multicollinearity ... 42

Table 7. Coefficient Determination & F-Test Result ... 44

Table 8. Coefficient of Regression ... 45

Table 9. Coefficient Correlation of Regression ... 45

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LIST OF APPENDIX

Table Page

Data Annual Report from Arpeni Pratama Ocean Line Tbk. ... 53

Data Annual Report from Adi Sarana Armada Tbk. ... 54

Data Annual Report from Pelayaran Nasional Bina Buana Raya Tbk. ... 54

Data Annual Report from Berlian Laju Tanker Tbk. ... 54

Data Annual Report from Buana Listya Tama Tbk. ... 55

Data Annual Report from Cardig Aero Services Tbk. ... 55

Data Annual Report from AirAsia Indonesia Tbk. ... 56

Data Annual Report from Garuda Indonesia (persero) Tbk. ... 56

Data Annual Report from Humpuss Intermoda Transportation Tbk. ... 56

Data Annual Report from Indonesia Air transport Tbk. ... 57

Data Annual Report from PT Indomobil Sukses International Tbk. ... 57

Data Annual Report from Logindo Samudramakmur Tbk. ... 57

Data Annual Report from Mitra International Resources Tbk. ... 58

Data Annual Report from Pelayaran Nelly Dwi Putri Tbk. ... 58

Data Annual Report from Indo Straits Tbk. ... 58

Data Annual Report from Rig Tenders Indonesia Tbk. ... 59

Data Annual Report from Steady Safe Tbk. ... 59

Data Annual Report from Sidomulyo Selaras Tbk. ... 59

Data Annual Report from Trans Power Marine Tbk. ... 61

Data Annual Report from PT Astra International Tbk. ... 61

Data Annual Report from Panorama Transportasi Tbk. ... 61

Data Annual Report from Wintermar Offshore Marine Tbk. ... 62