THE RELEVANCE OF ESG PERFORMANCE TO TAX AVOIDANCE (EMPIRICAL STUDY OF MINING AND ENERGY COMPANIES LISTED ON THE INDONESIAN STOCK EXCHANGE)
Kunti Sunaryo1, Sri Astuti2, Indah Kartika Sandhi3

Economic and Business, UPN ^Veteran Yogyakarta.

Abstract

The purpose of this study is to empirically examine the impact of ESG performance on corporate tax avoidance among energy companies in Indonesia. Paying taxes in accordance with the law is an obligation that every economic entity has to fulfil. However, paying taxes increases cash outlays and companies are motivated to engage in tax avoidance behaviour. Based on the Statistical Review 2022, Indonesia ranks 24th as the world^s largest oil producing country with a total of 692 thousand barrels per day or 0.8% of the world^s oil production. However, the implementation of the oil and gas income tax (PPh Migas) in 2019 did not meet expectations. Even in 2020, tax revenues from the mining and quarrying sector fell dramatically. Much research has been done on ESG, but few studies have examined the impact of companies^ ESG performance on strategic decision-making. Tax avoidance not only leads to a loss of national tax revenues, but also undermines the effective allocation of tax resources. Investigating corporate tax avoidance behaviour can provide a more comprehensive understanding of the economic consequences of ESG.

Keywords: ESG Performance, Tax Avoidance, Oil and Gas

Topic: Social Science