The Influence of Tax Payment Disclosure in GRI-Based Sustainability Reports on Tax Avoidance: A Cross-Country Analysis of Indonesia and Singapore

Abstract

This study aims to analyze the impact of tax disclosure in GRI-based sustainability  reporting on tax avoidance in companies listed on the stock exchanges of Indonesia and  Singapore during the period 2014-2023. Utilizing panel data and a fixed effects model, this  study explores the relationship between tax payment disclosure in sustainability reporting, company size, gross fixed assets, profitability, leverage, development level, CSR  Mandatoriness, and the market-to-book ratio with the level of tax avoidance. The sample is  categorized into three groups: the first group examines how tax disclosure in GRI-based  sustainability reporting affected tax avoidance in different countries, the second group  examines how nation's development level influences tax avoidance, while the third group  investigates the impact of mandatory sustainability reporting on tax avoidance, offering a more  limpid insight into the effects of sustainability reporting. The research uncovers distinct  differences in tax avoidance strategies between developed and developing countries,  emphasizing significant behavioral discrepancies linked to varying levels of development and  CSR mandatoriness enforcement. The multiple regression analysis indicates that tax disclosure  in GRI-based sustainability reporting negatively related to tax avoidance in developing  countries. Furthermore, the test result also shows the positive relationship between CSR  mandatoriness and development levels with tax avoidance in Indonesia and Singapore. This  study offers practical insights for designing ethical and effective tax strategies, taking the  contrasting tax practices between developed and developing nations and the influence of  mandatory reporting into account.