Impact of Corporate Social Responsibility, Profitability, Leverage, and Capital Intensity on Tax Aggressiveness: The Moderating Role of Firm Size in Indonesian Manufacturing Sector

In Indonesian manufacturing, the evasion of tax obligations presents a formidable challenge, diminishing the potential tax revenues accruing to the state. Rooted in agency theory, this investigation seeks to empirically elucidate the interrelations between corporate social responsibility (CSR), profitability, leverage, capital intensity, and corporate tax aggressiveness, with an emphasis on the moderating influence of firm size. Through a causal design and quantitative analysis, this examination scrutinizes data from 66 manufacturing entities listed on the Indonesia Stock Exchange over the period 2018 to 2022. The analysis, employing panel data regression techniques, demonstrates that CSR exerts a negative influence on tax aggressiveness, whereas profitability and capital intensity are positively associated with such behavior. Leverage, however, is not found to significantly affect tax aggressiveness. Furthermore, firm size is observed to negatively moderate the relationship between CSR and tax aggressiveness while positively moderating the relationship between both profitability and capital intensity with tax aggressiveness. The moderating effect of firm size on the leverage-tax aggressiveness nexus, however, remains non-significant. These findings underscore the complex dynamics influencing tax aggressiveness and suggest a need for stringent regulatory oversight and enforcement against aggressive tax avoidance tactics deployed by manufacturing firms. Recommendations include the establishment of clearer definitions of unauthorized tax avoidance practices, the imposition of severe penalties for non-compliance, and the enhancement of international collaboration to combat tax avoidance. This study not only contributes to the scholarly discourse on tax aggressiveness but also offers pragmatic insights for policymakers aimed at curtailing practices that undermine state revenue.