Will Problems Arise When Banks are Exempted from Thin Capitalization Regulation?

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Published: Dec 28, 2018
DOI: https://doi.org/10.21067/jem.v14i3.2751
Keywords:
thin capitalization, debt-to-equity ratio, tax avoidance, effective tax rate

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Arfah Habib Saragih
Department of Fiscal Administration Science, Faculty of Administrative Science, Universitas Indonesia, Indonesia

Abstract

This research was intended to provide empirical evidences that the exemption of banks from Minister of Finance Decree Number 169/PMK.010/2015 did not raise any significant problem on banks tax avoidance which was measured by effective tax rates. Quantitative method was used in this study by conducting regression-fixed effects method on unbalanced panel data. This study found that thin capitalization in banks did not impact effective tax rates significantly. Present research also found that the banks size and profitability were other determinants of the level of tax avoidance in the banks sample. Bank size and profitability had a significant and negative effect on effective tax rate.

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How to Cite
Saragih, A. H. (2018). Will Problems Arise When Banks are Exempted from Thin Capitalization Regulation?. Jurnal Ekonomi Modernisasi, 14(3), 157–167. https://doi.org/10.21067/jem.v14i3.2751
Issue
Vol. 14 No. 3 (2018): Oktober
Section
Articles

Authors who submit a manuscript understand that if the manuscript is accepted for publication, the copyright of the article shall be assigned to Jurnal Ekonomi Modernisasi (JEM).

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