P a ama, A ie; Kama uzzaman Muhammad
A icle
Op imizing ax compliance: Unde s anding he link be ween company ax adminis a ion and ax
a oidance (A su ey o public companies in Indonesia, Malaysia, Singapo e, and Thailand o he
2022-2023 pe iod)
Economies
P o ided in Coope a ion wi h:
MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel
Sugges ed Ci a ion: P a ama, A ie; Kama uzzaman Muhammad (2025) : Op imizing ax compliance:
Unde s anding he link be ween company ax adminis a ion and ax a oidance (A su ey o public
companies in Indonesia, Malaysia, Singapo e, and Thailand o he 2022-2023 pe iod), Economies,
ISSN 2227-7099, MDPI, Basel, Vol. 13, Iss. 7, pp. 1-30,
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Ci a ion: P a ama, A., & Muhammad,
K. (2025). Op imizing Tax Compliance:
Unde s anding he Link Be ween
Company Tax Adminis a ion and Tax
A oidance (A Su ey o Public
Companies in Indonesia, Malaysia,
Singapo e, and Thailand o he
2022–2023 Pe iod). Economies,13(7),
194. h ps://doi.o g/10.3390/
economies13070194
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A icle
Op imizing Tax Compliance: Unde s anding he Link Be ween
Company Tax Adminis a ion and Tax A oidance (A Su ey o
Public Companies in Indonesia, Malaysia, Singapo e, and
Thailand o he 2022–2023 Pe iod)
A ie P a ama 1,* and Kama uzzaman Muhammad 2
1Depa men o Accoun ing, Facul y o Economics and Business, Uni e si as Padjadja an,
Bandung 40132, Indonesia
2Facul y o Accoun ancy, Uni e si i Teknologi MARA Cawangan Selango , Puncak Alam 42300, Malaysia;
[email p o ec ed]
*Co espondence: [email p o ec ed]
Abs ac
Tax compliance emains a c i ical issue in co po a e axa ion esea ch, pa icula ly in unde -
s anding he causal link be ween he adminis a ion o co po a e ax and ax a oidance.
This s udy in es iga es he po en ial simul aneous ela ionship be ween he wo by ana-
lyzing 277 lis ed i ms ac oss ou Sou heas Asian coun ies using wo-yea a e age da a
(2022–2023). The adminis a ion o co po a e ax is measu ed using eigh disclosu e-based
indica o s om he Re ini i Eikon da abase, while ax a oidance is p oxied by he e ec i e
ax a e (ETR). The p ima y analysis applies mul iple eg ession o assess he e ec o ax
adminis a ion on ax a oidance and logis ic eg ession o e alua e he e e se ela ionship.
To add ess endogenei y and es o simul anei y, obus ness checks using wo-s age leas
squa es (2SLS) and ins umen al a iable echniques a e employed. The esul s con i m
a bidi ec ional ela ionship: a s onge adminis a ion o co po a e ax is associa ed wi h
lowe ax a oidance, while ax a oidance beha io also shapes ax adminis a ion p ac ices.
These indings unde sco e he impo ance o s eng hening in e nal ax go e nance as a
ounda ion o compliance. Gi en a ying le els o ax adminis a ion ac oss coun ies, his
s udy calls o g ea e in e na ional coo dina ion o s anda dize co po a e ax go e nance
p ac ices and educe a oidance incen i es.
Keywo ds: ax adminis a ion; ax a oidance; Sou heas Asia; simul aneous equa ion
1. In oduc ion
In ecen yea s, ax a oidance in Sou heas Asia has become a signi ican conce n
o go e nmen s and policymake s. The egion’s apid economic g ow h and inc easing
in eg a ion in o he global economy ha e c ea ed oppo uni ies o bo h indi iduals and
co po a ions o engage in ax a oidance p ac ices. While o en legal, hese p ac ices can
esul in subs an ial e enue losses o go e nmen s and con ibu e o income inequali y
(Hossain e al.,2024). Many Sou heas Asian coun ies ha e been wo king o imp o e hei
ax adminis a ion sys ems and s eng hen hei ax go e nance. Recen de elopmen s
in axpaye managemen and go e nance in Sou heas Asia ha e ocused on le e aging
echnology and imp o ing adminis a i e p ocesses. Fo ins ance, se e al coun ies in
he egion ha e begun implemen ing e-go e nmen ini ia i es, including elec onic ax-
iling sys ems, o enhance e iciency and educe oppo uni ies o agg essi e ax a oidance
Economies 2025,13, 194 h ps://doi.o g/10.3390/economies13070194
Economies 2025,13, 194 2 o 30
(Holliday,2002). Addi ionally, he e has been g owing in e es in u ilizing a i icial in elli-
gence and big da a analy ics o de ec agg essi e ax a oidance wi hin complex co po a e
ne wo ks (Nu yani e al.,2024). These echnological ad ancemen s a e complemen ed
by e o s o imp o e ax adminis a ion, inc ease anspa ency, and os e a cul u e o
compliance among axpaye s (Malkawi & Haloush,2008). In ecen yea s, echnological
ad ancemen s, pa icula ly in a i icial in elligence (AI), machine lea ning, and big da a
analy ics, ha e ans o med ax compliance sys ems globally (Nembe e al.,2024). Tax
au ho i ies inc easingly ely on AI-d i en ools o de ec i egula i ies, au oma e audi s, and
iden i y pa e ns o co po a e ax a oidance (Belahouaoui & A ak,2024). This e olu ion in
en o cemen mechanisms has aised he compliance bu den on i ms and, a he same ime,
in luenced manage ial decisions ega ding ax planning and adminis a ion.
Despi e hese e o s, challenges emain in add essing ax a oidance in Sou heas
Asia. The egion’s di e se economic landscape, a ying le els o na ional go e nance
quali y, and complex co po a e s uc u es con inue o pose di icul ies o ax au ho i ies
(Mon eneg o,2021;Nu yani e al.,2024). As Sou heas Asian coun ies con inue o de elop
hei ax sys ems, balancing he need o e enue collec ion while c ea ing an a ac i e
business en i onmen emains a key challenge o egional policymake s.
Resea ch on ax a oidance plays a c ucial ole in unde s anding and add essing he
complex challenges aced by mode n ax sys ems. As go e nmen s wo ldwide g apple wi h
he need o inc ease ax compliance and educe e enue losses, pa icula ly in he a e ma h
o economic down u ns like he COVID-19 pandemic, he impo ance o his ield o s udy
has become inc easingly e iden (Paleka & Vi ezi´c,2023). Resea ch on ax adminis a ion
and compliance beha io p o ides aluable insigh s in o he ac o s ha in luence axpaye s’
decisions o e ade o comply wi h ax laws, enabling policymake s o design mo e e ec i e
s a egies o imp o ing olun a y compliance (Lu me & Singhal,2014). The s udy o
ax a oidance and compliance encompasses a wide ange o ac o s, including indi idual
and co po a e axpaye cha ac e is ics, ax adminis a ion p ac ices, and he impac o
eme ging echnologies (Belahouaoui & A ak,2024;Hossain e al.,2024). By examining
hese aspec s, esea che s can iden i y c i ical gaps in unde s anding axpaye he e ogenei y
and de elop mo e nuanced app oaches o add essing non-compliance (Paleka & Vi ezi´c,
2023). Fu he mo e, esea ch in his ield has e ealed he signi icance o non-pecunia y
mo i a ions such as ax mo ale and social no ms in shaping compliance beha io s (Lu me
& Singhal,2014;Pui Yee e al.,2017). In conclusion, ax a oidance esea ch se es as a
i al b idge be ween academic unde s anding and p ac ical policy implemen a ion. By
p o iding e idence-based insigh s in o he complex dynamics o ax compliance, his
s udy enables ax au ho i ies o de elop mo e a ge ed and e ec i e s a egies o comba
a oidance, imp o e ai ness, and ul ima ely enhance he o e all e iciency o ax sys ems
(Belahouaoui & A ak,2024;Lu me & Singhal,2014).
The adminis a ion o co po a e ax plays a c ucial ole in ensu ing axpaye com-
pliance, educing co po a e isk, and minimizing he likelihood o ax audi s and aud.
E ec i e ax policies aim o s ike a balance be ween gene a ing e enue o he go e n-
men and main aining a a o able business en i onmen . These policies o en in ol e
a complex in e play be ween epo ing equi emen s, audi s a egies, and en o cemen
mechanisms designed o encou age compliance and de e a oidance. Resea ch has shown
ha pa i ioning axable income in o mul icomponen epo s can educe o e all agg essi e
ax a oidance and inc ease ax au ho i y ne e enue collec ions compa ed o single- epo
models (Rhoades,1999). This app oach allows ax au ho i ies o ailo hei audi policies
and conside all he ax e u n in o ma ion, po en ially leading o a mo e e ec i e de ec ion
o non-compliance. Howe e , he impac on p edic ed a oidance is no uni o m ac oss
axpaye s, wi h some educing a oidance, while o he s wi h mul iple oppo uni ies may
Economies 2025,13, 194 3 o 30
be mo e likely o e ade when aced wi h mul icomponen epo ing equi emen s. The
e ec i eness o The adminis a ion o co po a e ax in ensu ing compliance and educing
isk depends on a ious ac o s, including he unce ain y su ounding audi p obabili ies,
he se e i y o penal ies, and o e all ax mo ale wi hin he business communi y. S udies
ha e shown ha inc easing unce ain y abou audi p obabili ies (ambigui y) can inc ease
ax compliance o ambigui y-a e se axpaye s bu may educe compliance o ambigui y
lo e s (Snow & Wa en,2005). Addi ionally, he ac i i ies o ax en o cemen agencies, such
as he IRS C iminal In es iga ion Di ision, ha e been ound o ha e a measu able and
signi ican e ec on olun a y compliance (Dubin,2007).
P e ious esea ch has no di ec ly add essed he simul aneous in luence o company
ax adminis a ion and ax a oidance. Howe e , some insigh s can be d awn om he
a ailable in o ma ion. Co po a e ax a oidance is in luenced by a ious ac o s, including
i m cha ac e is ics, poli ical connec ions, and co po a e social esponsibili y ac i i ies
(Duhoon & Singh,2023). Companies adop ax a oidance ac ics o boos pos - ax p o i s
and mee sha eholde s’ expec a ions (Duhoon & Singh,2023). A he same ime, ypes o
company ax adminis a ion, such as ax in o ma ion sys ems, ax calcula ion, and epo ing
schemes, and speci ic ax managemen uni s, a e designed o encou age speci ic beha io s
such as inno a ion and be e compliance (Gao e al.,2015). This sugges s a po en ial
bidi ec ional ela ionship be ween ax adminis a ion and a oidance beha io . In e es ingly,
he e ec i eness o ax bene i s o inno a ion is la gely anecdo al, and he empi ical
examina ion o he in luence o inno a ion on i m-le el axa ion is s ill unde explo ed
(Gao e al.,2015). This gap highligh s he need o u he in es iga ion o he simul aneous
in luence o company ax adminis a ion and ax a oidance beha io s. In conclusion, while
he p o ided s udies do no explici ly examine he simul aneous in luence o company
ax adminis a ion and ax a oidance, hey sugges a complex in e play be ween he
wo. This s udy ocuses on his bidi ec ional ela ionship o be e unde s and how The
adminis a ion o co po a e ax shapes a oidance beha io s and how hese beha io s, in
u n, in luence he de elopmen o he adminis a ion o co po a e ax.
This esea ch examines he complex in e play be ween co po a e axpaye ax adminis-
a ion and ax a oidance beha io s. Speci ically, his s udy aims o in es iga e he po en ial
simul aneous ela ionship be ween hese wo ac o s, explo ing how he adminis a ion
o co po a e ax in luences ax a oidance p ac ices and, con e sely, how ax a oidance
beha io s shape he de elopmen and implemen a ion o he adminis a ion o co po a e
ax. By analyzing his bidi ec ional ela ionship, his s udy seeks o p o ide aluable
insigh s in o he dynamics o co po a e ax compliance, he e ec i eness o cu en ax
adminis a ion, and he s a egies employed by companies o minimize hei ax liabili ies.
This s udy con ibu es o a mo e comp ehensi e unde s anding o he ac o s d i ing
co po a e ax beha io and in o ms he de elopmen o mo e e ec i e ax adminis a ion
and en o cemen mechanisms.
This esea ch in oduces a no el app oach o examine he ela ionship be ween he
adminis a ion o co po a e ax and ax a oidance beha io s by u ilizing da a disclosed in
annual epo s and ga he ed h ough he Re ini i Eikon da abase. The no el y o his s udy
lies in i s explo a ion o he po en ial simul aneous and bidi ec ional ela ionship be ween
ax adminis a ion and ax a oidance p ac ices, mo ing beyond adi ional unidi ec ional
analyses. By le e aging he comp ehensi e inancial da a a ailable in he Re ini i Eikon
da abase, his s udy conduc s a mo e nuanced and da a-d i en in es iga ion o how he
adminis a ion o co po a e ax in luences ax a oidance s a egies, and ice e sa. This
app oach allows o a mo e holis ic unde s anding o co po a e ax beha io , po en ially
e ealing complex in e ac ions and eedback loops ha ha e been p e iously o e looked.
The use o annual epo da a p o ides a eliable and s anda dized sou ce o in o ma ion,
Economies 2025,13, 194 4 o 30
enhancing he alidi y and compa abili y o he indings ac oss di e en companies and
sec o s. This inno a i e me hodology yields new insigh s in o he dynamics o co po a e ax
compliance and he e ec i eness o ax adminis a ion, con ibu ing o bo h he academic
li e a u e and p ac ical adminis a ion o mula ions.
This s udy ocuses on ax a oidance, de ined as he legal educ ion o co po a e ax
liabili y h ough s a egic planning and he exploi a ion o egula o y gaps (Duhoon &
Singh,2023). While some p io discussions on co po a e ax beha io e e ence bo h
a oidance and e asion, i is c i ical o dis inguish be ween he wo. Tax e asion in ol es
illegal p ac ices such as he concealmen o income o alsi ica ion o expenses, whe eas
ax a oidance ope a es wi hin he bounds o he law (Alm,1988). Gi en ha his s udy
analyzes publicly lis ed companies in egula ed ma ke s, i is highly unlikely ha any i ms
in he sample engage in ax e asion.
The es o he pape is o ganized as ollows: Sec ion 2p esen s a b ie li e a u e e iew
and esea ch hypo heses; Sec ion 3desc ibes he esea ch me hod; Sec ion 4p o ides he
esea ch esul s, implica ions, and discussion; and Sec ion 5concludes he a icle.
2. Li e a u e Re iew and Hypo heses’ De elopmen
2.1. Tax Compliance Theo y
Co po a e ax compliance heo y has been ex ensi ely s udied in ela ion o ax a oid-
ance, adminis a ion, and disclosu es. The li e a u e e eals a complex in e play be ween
hese ac o s, highligh ing he mul i ace ed na u e o co po a e ax beha io . Tax com-
pliance heo y posi s ha i ms comply wi h ax obliga ions no only because o legal
en o cemen bu also because o pe cei ed ai ness, us in ax ins i u ions, and epu-
a ional conside a ions (Appiah e al.,2024;Fa a e al.,2017). Wi hin his amewo k,
ax adminis a ion p ac ices such as anspa ency, boa d o e sigh , and in e nal isk con-
ols se e as ins i u ional mechanisms ha ein o ce complian beha io and educe he
likelihood o agg essi e ax planning.
In addi ion, se e al accoun ing heo ies o e aluable insigh s in o he ela ionship
be ween ax adminis a ion and ax a oidance. Agency heo y, o ins ance, sugges s
ha manage s may engage in oppo unis ic beha io such as ax a oidance o maximize
sho - e m pe o mance o pe sonal gain (Zolo oy e al.,2020). S ong ax o e sigh and
go e nance s uc u es, such as independen audi commi ees o ax isk managemen
p ac ices, can mi iga e agency con lic s by aligning manage ial incen i es wi h sha eholde
in e es s (Ama a e al.,2025). Legi imacy heo y u he explains ha i ms a e mo i a ed
o demons a e esponsible ax beha io o main ain social legi imacy, pa icula ly in
en i onmen s wi h inc easing s akeholde sc u iny (Xu e al.,2022). Signaling heo y also
suppo s his pe spec i e by emphasizing ha i ms use ax disclosu e and go e nance
mechanisms o di e en ia e hemsel es in he eyes o in es o s and egula o s. Companies
wi h low le els o ax a oidance and obus ax go e nance may use hese signals o a ac
long- e m capi al, educe in o ma ion asymme y, and es ablish c edibili y (Khu ana &
Mose ,2012). Toge he , hese heo e ical lenses help explain how ax adminis a ion ac s as
bo h a con ol and communica ion mechanism ha in luences he deg ee o ax a oidance
p ac iced by i ms.
Tax a oidance is a signi ican conce n in co po a e axa ion, anging om he legi i-
ma e use o ax ules o ou igh iola ions o ax laws (Wang e al.,2019). The de e minan s
o ax a oidance beha io a e di e se and include i m cha ac e is ics, poli ical connec ions,
and co po a e social esponsibili y ac i i ies (Duhoon & Singh,2023). Mul ina ional co po-
a ions engage in a ious agg essi e ax a oidance s a egies such as ans e misp icing,
in e na ional deb shi ing, ea y shopping, ax de e al, and co po a e in e sions (Bee
e al.,2019).
Economies 2025,13, 194 5 o 30
Tax adminis a ion plays a c ucial ole in shaping co po a e compliance. Resea ch
sugges s ha a 1 pe cen age-poin lowe co po a e ax a e expands be o e- ax income by
1%, an e ec ha appea s o be inc easing o e ime (Bee e al.,2019). Howe e , he impac
o ax a oidance on i ms’ alue and pe o mance is mixed, as demons a ed in a s udy
o Vie namese lis ed i ms (Khuong e al.,2020). A pe cep ion and knowledge o axes’
ai ness signi ican ly in luence co po a e axpaye s’ willingness o pay axes and o e all
ax compliance (Oladipo e al.,2022).
Rega ding ax disclosu es, manda o y inancial anspa ency has been shown o a ec
co po a e ax a oidance. A s udy o Eu opean mul ina ional banks ound ha public
coun y-by-coun y epo ing led o inc eased ax expenses o banks wi h p e iously
undisclosed ac i i ies in ax ha ens (O e esch & Wol ,2021). This inding sugges s ha
comp ehensi e ax anspa ency can se e as an e ec i e ins umen o cu b co po a e
ax a oidance. Co po a e ax compliance heo y encompasses a wide ange o ac o s
ha in luence ax beha io . While ax a oidance emains a signi ican issue, esea ch
indica es ha adminis a i e measu es, such as imp o ed anspa ency and ai ness, can
enhance compliance.
2.2. Tax Adminis a ion
The adminis a ion o co po a e ax e e s o he s a egies and app oaches adop ed
by companies o manage hei ax obliga ions wi hin legal amewo ks (G ibnau & Jallai,
2017). I encompasses a ious aspec s o ax planning, compliance, and managemen
aimed a op imizing a company’s ax posi ion while adhe ing o egula o y equi emen s
(P a ama & P a iwi,2022). The de ini ion o he adminis a ion o co po a e ax can a y
bu gene ally in ol es a sys ema ic app oach o managing a company’s ax a ai s. This
includes decisions on ax planning, isk managemen , and compliance s a egies (R. C.
Ch is ensen,2024). These me ics help companies assess hei ax pe o mance and make
in o med decisions ega ding hei ax s a egies. In e es ingly, esea ch has shown ha
co po a e ax a oidance beha io , a key aspec o ax adminis a ion, can ha e con adic o y
e ec s on i ms’ alue, ma ke g ow h, and co po a e anspa ency disclosu e decisions
(Duhoon & Singh,2023).
The complex na u e o ax adminis a ion and i s a - eaching na u e ha e implica ions
o a ious aspec s o co po a e pe o mance (P a ama,2022). The adminis a ion o
co po a e ax is a mul i ace ed concep ha in ol es s a egic decision-making o op imize
a company’s ax posi ion (Rudyan o,2024). While i aims o minimize ax liabili ies, i mus
also ensu e compliance wi h he legal equi emen s. The use o KPIs in ax managemen
allows companies o moni o hei pe o mance and adjus hei s a egies acco dingly
(Chow e al.,2023). Howe e , he impac o agg essi e ax managemen can be double-
edged, a ec ing a ious aspec s o co po a e pe o mance and s akeholde pe cep ion
(Oa s & Tuck,2019).
Recen esea ch has shed ligh on he inc easing impo ance o ax go e nance mecha-
nisms in in luencing co po a e ax beha io . In pa icula , ax anspa ency has eme ged
as a c ucial ac o in de e mining a i m’s ax planning app oach. Companies ha demon-
s a e highe le els o anspa ency in hei ax a ai s a e gene ally less inclined owa ds
agg essi e ax a oidance s a egies (Balak ishnan e al.,2018). This anspa ency ac s as
a signal o legi imacy o a ious s akeholde s, including in es o s, egula o s, and he
public (Zhang e al.,2022). By openly disclosing hei ax p ac ices and policies, i ms can
build us and c edibili y, po en ially mi iga ing he epu a ional isks associa ed wi h
pe cei ed ax agg essi eness.
In addi ion o anspa ency, an enhanced ax isk o e sigh has been iden i ied as
ano he key elemen in shaping esponsible co po a e ax beha io . Independen boa d
Economies 2025,13, 194 6 o 30
commi ees dedica ed o o e seeing ax- ela ed ma e s ha e been shown o play a signi i-
can ole in educing oppo unis ic ax planning (Beasley e al.,2020). These commi ees
can p o ide a specialized expe ise and independen sc u iny o a company’s ax s a egies,
ensu ing ha hey align wi h b oade co po a e go e nance p inciples and e hical s an-
da ds. By implemen ing obus ax go e nance s uc u es, i ms can be e manage hei ax
isks, comply wi h e ol ing egula ions, and main ain a balance be ween ax e iciency and
co po a e social esponsibili y (Abdel a ah & Aboud,2020). These insigh s sugges ha
in e nal go e nance s uc u es and anspa ency a e essen ial componen s o an e ec i e
adminis a ion o co po a e ax.
2.3. Tax A oidance
Tax a oidance is a complex co po a e beha io ha has ga ne ed signi ican a en ion
in academic esea ch. I is gene ally de ined as he legal educ ion o ax liabili ies using
a ious s a egies and echniques (Bee e al.,2019). The measu emen o ax a oidance
ypically in ol es using e ec i e ax a es, calcula ed by di iding ax expenses by p e- ax in-
come (Chan e al.,2015). The ela ionship be ween ax a oidance and co po a e go e nance
is bo h mul i ace ed and ambiguous. While some s udies sugges ha s ong co po a e
go e nance can mi iga e he nega i e consequences o ax a oidance (Baya e al.,2018),
o he s ind a nega i e associa ion be ween go e nance and ax a oidance (Ko e mann &
Vel e,2021). In e es ingly, he impac on i ms’ alue a ies ac oss ins i u ional con ex s.
The posi i e ela ionship be ween ax a oidance and i ms’ alue diminishes in coun ies
wi h weak co po a e go e nance and high le els o co up ion (Tang,2017). This sugges s
ha he alue o ax a oidance is in luenced by he he e ogeneous agency cos s associa ed
wi h di e en ins i u ional en i onmen s. A li e a u e e iew o ax a oidance e eals
a complex in e play be ween co po a e go e nance, ins i u ional ac o s, and i m alue
(Jiang e al.,2020). While ax a oidance can po en ially c ea e alue o sha eholde s, i s
e ec s a e mode a ed by a ious ac o s, including he s eng h o co po a e go e nance
mechanisms and ins i u ional en i onmen (O iz-De-Mandojana e al.,2014).
This s udy uses ETR as a single p oxy o measu e ax a oidance due o i s widesp ead
accep ance, consis ency, and compa abili y ac oss ju isdic ions. The ETR, calcula ed as he
o al income ax expense di ided by he p e- ax income, cap u es he e ec i e ax bu den
bo ne by i ms and e lec s he cumula i e impac o hei ax planning s a egies. While
al e na i e p oxies, such as cash ETR o book– ax di e ences, exis , hey p esen no able
limi a ions in mul i-coun y s udies. The cash ETR is sensi i e o iming di e ences and
ola ile paymen schedules, which a e pa icula ly inconsis en in eme ging ma ke con ex s
(Edwa ds e al.,2020). Howe e , book– ax di e ences equi e g anula da a no uni o mly
disclosed ac oss all he i ms o coun ies in his s udy (Towe y,2017). Mo eo e , using
mul iple p oxies may in oduce me hodological inconsis encies and educe he sample size
owing o da a’s una ailabili y. The e o e, he use o a s anda dized, consis en ly epo ed
measu e, such as ETR, ensu es obus ness and compa abili y in c oss-coun y analyses while
aligning wi h p io esea ch in he ield (Dy eng e al.,2007;Ko e mann & Vel e,2021).
While a ious mechanisms o ax a oidance ha e been iden i ied in he global li -
e a u e, including he use o ax shel e s, hyb id ins umen s, and inancial enginee ing,
many o hese p ac ices a e mo e p e alen in ju isdic ions such as he Uni ed S a es and
may no apply uni o mly o Sou heas Asia (Cobham & Janský,2018). In he con ex o
Indonesia, Malaysia, Singapo e, and Thailand, he dominan mechanism o co po a e ax
a oidance is p o i shi ing h ough ans e p icing a angemen s be ween ela ed en i ies
(Kim e al.,2011;Lohse & Riedel,2013). These p ac ices in ol e ealloca ing p o i s o
lowe - ax ju isdic ions by manipula ing in a-g oup ansac ions, such as he p icing o
goods, se ices, o in angible asse s (Choi e al.,2020). Howe e , due o limi a ions in
Economies 2025,13, 194 7 o 30
he a ailabili y o i m-le el in e na ional ax disclosu es—such as coun y-by-coun y
epo ing (CbCR), his s udy adop s he e ec i e ax a e (ETR) as a commonly used, albei
impe ec , p oxy o o e all ax a oidance beha io .
2.4. Hypo hesis De elopmen
The adminis a ion o co po a e ax plays a signi ican ole in shaping co po a e ax
a oidance beha io . Recen li e a u e sugges s ha ax decisions a e c ucial manage ial
decisions, wi h manage s using ax a oidance ac ics o inc ease a e - ax p o i s and ul ill
sha eholde s’ expec a ions (Duhoon & Singh,2023). The ela ionship be ween he adminis-
a ion o co po a e ax and ax a oidance is complex and mul i ace ed and is in luenced by
a ious ac o s, such as i ms’ cha ac e is ics, poli ical connec ions, and co po a e social e-
sponsibili y ac i i ies (Duhoon & Singh,2023;K ieg & Li,2021). In e es ingly, he li e a u e
e eals con adic ions in he ela ionship be ween he adminis a ion o co po a e ax and
ax a oidance. While some s udies conclude ha socially esponsible companies a e mo e
likely o engage in ax a oidance (Gulza e al.,2018), o he s sugges a nega i e ela ionship
be ween co po a e social esponsibili y (CSR) and ax a oidance (Ko e mann & Vel e,
2021). Se e al s udies sugges ha he adminis a ion o co po a e ax can signi ican ly
in luence ax a oidance h ough a ious mechanisms. These include ax ha ens (Jiang
e al.,2020), in e na ional deb shi ing, ea y shopping, and co po a e in e sions (Bee
e al.,2019). Fu he mo e, he impac o ax adminis a ion on a oidance beha io may a y
ac oss di e en con ex s and ju isdic ions, as shown by con as ing esul s in Indonesia
and Aus alia (Rini e al.,2023). The e is s ill a need o explo e hese a ia ions and iden i y
he speci ic adminis a i e elemen s ha mos e ec i ely de e o encou age ax a oidance
beha io . Based on agency and legi imacy heo ies, i ms ha ins i u ionalize ax o e sigh
and anspa ency mechanisms a e mo e likely o educe oppo unis ic ax beha io and
align manage ial ac ions wi h s akeholde expec a ions. These mechanisms help ins i u ion-
alize esponsible ax p ac ices wi hin o ganiza ions. The e o e, he ollowing hypo hesis
was o mula ed:
H1. Fi ms wi h s onge co po a e ax adminis a ion p ac ices exhibi lowe le els o ax a oidance.
Co po a e ax a oidance has been shown o signi ican ly in luences he adminis a ion
o co po a e ax h ough a ious mechanisms. Recen li e a u e sugges s ha companies
use ax a oidance s a egies o educe hei ax bu den, which, in u n, in luences hei
o e all ax adminis a ion decisions. Resea ch has shown ha companies wi h di ec o s
associa ed wi h ax ha ens exhibi g ea e ax a oidance beha io . Fo ins ance, U.S. com-
panies wi h di ec o s who ha e links o he Bahamas, Be muda, o he Cayman Islands
show a educ ion in hei e ec i e ax a e o one o h ee pe cen age poin s and an in-
c eased use o subsidia ies in ax ha ens (Jiang e al.,2020). This sugges s ha social and
p o essional connec ions play a c ucial ole in shaping he adminis a ion o co po a e
ax. Company cha ac e is ics and managemen decisions ha e a signi ican impac on
ax a oidance beha io . Manage s o en adop ax a oidance ac ics o inc ease a e - ax
p o i s, ul ill sha eholde s’ expec a ions, and some imes o pe sonal bene i . In addi ion,
co po a e cha ac e is ics, poli ical connec ions, and co po a e social esponsibili y ac i i ies
in luence ax decisions (Duhoon & Singh,2023). These ac o s collec i ely con ibu e o
he o mula ion o co po a e ax adminis a ion. Tax a oidance’s impac on co po a e
pe o mance and alue is also a c i ical ac o in shaping he adminis a ion o co po a e
ax. Some s udies indica e a mixed ela ionship be ween ax a oidance and co po a e
pe o mance, sugges ing ha he bene i s o ax a oidance may no always ou weigh he
po en ial isks and cos s (Khuong e al.,2020). This inding unde sco es he impo ance
o a balanced app oach o ax adminis a ion ha conside s bo h i s inancial and ep-
Economies 2025,13, 194 8 o 30
u a ional impac s. Co po a e ax a oidance signi ican ly in luences ax adminis a ion
h ough a ious in e ela ed ac o s, including he ela ionship be ween di ec o s, company
cha ac e is ics, CSR conside a ions, and he impac on pe o mance (Hasan e al.,2023).
As o ganiza ions na iga e hese complex ela ionships, hey mus ca e ully de elop ax
adminis a ions ha balance inancial objec i es wi h b oade s akeholde expec a ions
and egula o y compliance (Ramesh & A hi a,2023). Based on signaling heo y, anspa -
en i ms seek o legi imize hei ax beha io h ough s uc u ed disclosu e mechanisms,
he eby shaping he de elopmen o ax adminis a ion p ac ices in esponse o pe cei ed
sc u iny and epu a ional conside a ions. This app oach in luences he e olu ion o ax
adminis a ion p ac ices d i en by companies’ awa eness o sc u iny and conce ns abou
epu a ion. The e o e, he ollowing hypo hesis was o mula ed:
H2. Fi ms ha engage in lowe le els o ax a oidance a e mo e likely o adop o mal co po a e ax
adminis a ion p ac ices.
3. Me hod
This s udy ocuses on he Sou heas Asian egion. Se e al i ms in Sou heas Asia
engage in di e en a oidance s a egies, which a e o en shaped by weak en o cemen
and p o i -shi ing oppo uni ies. In eme ging ma ke s, pa icula ly in Sou heas Asia,
mul ina ional i ms o en exploi ins i u ional gaps and egula o y inconsis encies o engage
in ax a oidance h ough mechanisms such as ans e p icing and c oss-bo de p o i
shi ing. Howe e , he abili y o empi ically cap u e hese in e na ional a oidance s a egies
emains limi ed. This is p ima ily due o he absence o publicly a ailable de ailed da a
on consolida ed g oup-le el inancials o coun y-by-coun y epo ing wi hin s anda d
company annual epo s. As a esul , measu ing p o i shi ing wi h p ecision using he
a ailable da ase is cu en ly in easible. The e o e, his s udy ocuses on domes ically
obse able ax a oidance beha io s h ough p oxies, such as he e ec i e ax a e (ETR),
which a e consis en ly epo ed and e i iable, while ecognizing he b oade in e na ional
ax a oidance dynamics ha emain impo an bu ou side he empi ical scope o his
esea ch. The selec ed Sou heas Asian coun ies we e Indonesia, Malaysia, Singapo e, and
Thailand. These ou coun ies ha e he la ges G oss Domes ic P oduc (GDP) compa ed
o o he Sou heas Asian coun ies, so he po en ial ax ha can be achie ed om GDP
anges be ween 10 and 30%. This s udy conside s 2022 and 2023. The yea 2022 was
chosen as he ini ial yea o esea ch because 2022 is he ini ial implemen a ion o he
O ganiza ion o Economic Co-ope a ion and De elopmen (OECD) policy on Global
Minimum Taxa ion, which emphasizes ax anspa ency and he es ablishmen o minimum
ax a es o educe he le el o ax a oidance globally (Johannesen,2022). The yea 2024
could no be s udied because a he ime o he esea ch, many companies had no ye
epo ed hei annual epo s. The s udy popula ion comp ises all public companies in ou
Sou heas Asian coun ies, o aling 3007 companies, bu 277 companies ha e comple e da a:
21 companies om Indonesia, 139 companies om Malaysia, 42 companies om Singapo e,
and 75 companies om Thailand. Thus, 554 obse a ions we e s udied. This sample
e inemen was based on me hodological s anda ds commonly applied in ax a oidance
esea ch. Fi s , i ms epo ing ne losses we e excluded, as he e ec i e ax a e (ETR)
is no a meaning ul measu e o such companies because o he absence o nega i i y o
axable income (D. M. Ch is ensen e al.,2021). Second, i ms wi h ETR alues g ea e
han one we e elimina ed, gi en ha i is no economically plausible o a company o pay
income ax exceeding i s epo ed ea nings, which a e o en indica i e o da a i egula i ies,
de e ed ax anomalies, o non- ecu ing adjus men s (Schwab e al.,2021). Addi ionally,
Economies 2025,13, 194 15 o 30
LVG a iable. Desc ip i e s a is ics o LVG in 2023 gene ally dec eased compa ed wi h
2022, u he suppo ing he asse ion o imp o ed inancial pe o mance.
4.1.2. Co po a e Tax Adminis a ion Desc ip i es
Table 3compa es he disclosu e o co po a e ax adminis a ion (CTAR) elemen s ac oss
Indonesia, Malaysia, Singapo e, and Thailand, and he o e all a e ages o 2022 and 2023.
Based on he o e all ends, none o he eigh elemen s ha se ed as indica o s o he CTAR
a iable exhibi ed alues exceeding 20%. Howe e , mos elemen s saw a sligh inc ease in
disclosu es om 2022 o 2023, wi h Policy Tax T anspa ency ha ing he highes inc ease, om
10.47% o 17.33%. The lowes disclosu e is he Tax Audi o In o ma ion, a 0.36% in 2022 and
0.72% in 2023. In 2023, he highes le els o co po a e ax adminis a ion sco e we e obse ed
in he elemen s o Policy Tax T anspa ency (17.33% o e all, wi h Indonesia leading a 33.33%),
Taxes Align o Re enues (10.47% o e all, wi h Indonesia leading a 23.81%), and he Tax
Fai ness Commi men (8.66% o e all, again led by Indonesia a 19.05%). These esul s show
ha Indonesia places a ela i ely high emphasis on ax adminis a ion disclosu e and e hical
ax commi men s compa ed o o he coun ies in he egion, al hough he o e all anspa ency
le els in key a eas such as e i ica ion and audi o accoun abili y emain low. Howe e , i
should be no ed ha Indonesia has a smalle numbe o companies han o he coun ies, so a
la ge pe cen age in Indonesia does no necessa ily indica e ha implemen a ion in Indonesia
is much g ea e han in he o he h ee coun ies.
The Tax Da a Ve i ica ion elemen egis e s a low pe cen age o e all sco e o 1.08%
bo h in yea s 2022 and 2023, wi h Indonesia speci ically eco ding a alue o 0%. This may
be a ibu ed o Indonesia’s adhe ence o he p inciple o ax da a con iden iali y, whe eby
he ax da a p esen ed a e gene ally limi ed o hose eques ed in acco dance wi h gene al
inancial s a emen s (Bas i e al.,2021). The e is no indica ion o whe he he da a a e
e i ied in acco dance wi h ax p o isions. The condi ions in he o he h ee coun ies we e
simila ly limi ed, wi h only one company ep esen ed in each coun y. The Tax Fai ness
Commi men elemen also exhibi s a low pe cen age sco e, wi h o e all sco es o 6.86%
(2022) and 8.66% (2023). An inc ease in his elemen ’s sco e was obse ed ac oss all s udy
coun ies excep Indonesia. No ably, Malaysia shows a signi ican inc ease (3.60% o 6.47%)
in ol ing ou companies, om i e o nine companies.
The Tax Audi o In o ma ion elemen is he leas disclosed elemen , epo ed only
0.72% (2023), exclusi ely epo ed by Singapo e. Tax audi o s a e no manda o y in he
s udy coun ies, as inancial s a emen audi o s ypically do no conduc specialized ax
audi s (De Simone e al.,2014). Howe e , a ious s udies sugges ha ax go e nance can
be enhanced h ough a ie ed audi o ax aspec s in co po a e inancial s a emen s. Tax
audi o s’ examina ion may also mi iga e he isk o sc u iny by axa ion au ho i ies (Chyz
e al.,2021). Tax O e sigh by The Boa d has a disclosu e alue o 6.86% (2023). Indonesia
consis en ly led, wi h 19.05% o companies disclosing his elemen in bo h 2022 and 2023,
indica ing a s onge emphasis on boa d-le el in ol emen in ax go e nance. O he
coun ies showed g adual imp o emen s, mos no ably Malaysia, which inc eased om
h ee disclosu es in 2022 o se en in 2023, e lec ing g owing awa eness and esponsibili y
a he boa d le el ega ding co po a e ax ma e s. Gene ally, in he ou coun ies s udied,
he e is no egula o y equi emen o boa d membe s o speci ically o e see ax obliga ions
and p esen ax epo s (Beasley e al.,2020). None heless, some companies ha e audi
o isk commi ees ha add ess ax isk and compliance (Klassen e al.,2015). The e was
a gene al imp o emen in he elemen Taxes Align o Re enues in all coun ies in 2023,
wi h he disclosu e a e inc easing om 7.94% in 2022 o 10.47%. This posi i e end
was pa icula ly e iden in Thailand and Malaysia, whe e he numbe o companies ha
disclosed his in o ma ion inc eased signi ican ly. The esul s sugges ha companies a e
Economies 2025,13, 194 16 o 30
making p og ess in showing ha hei ax paymen s ma ch hei e enues, e lec ing a
g owing awa eness o he impo ance o ax anspa ency and ai ness. All he s udy
coun ies gene ally adhe e o OECD p inciples, ensu ing ai ax paymen s commensu a e
wi h he income ea ned. These OECD p inciples ha e been in eg a ed in o each coun y’s
ax egula ions (Alinaghi & Reed,2020).
Table 3. Co po a e ax adminis a ion sco e.
Elemen s o CTAR Yea Indonesia Malaysia Singapo e Thailand O e all
% o Companies ha Disclosed
Tax Da a Ve i ica ion
2023 01113
0.00% 0.72% 2.38% 1.33% 1.08%
2022 01113
0.00% 0.72% 2.38% 1.33% 1.08%
Tax Fai ness
Commi men
2023 4 9 6 5 24
19.05% 6.47% 14.29% 6.67% 8.66%
2022 5 5 5 4 19
23.81% 3.60% 11.90% 5.33% 6.86%
Tax Audi o In o ma ion
2023 00202
0.00% 0.00% 4.76% 0.00% 0.72%
2022 00101
0.00% 0.00% 2.38% 0.00% 0.36%
Tax O e sigh by Boa d
2023 4 7 6 2 19
19.05% 5.04% 14.29% 2.67% 6.86%
2022 4 3 5 3 15
19.05% 2.16% 11.90% 4.00% 5.42%
Taxes Align o Re enues
2023 5 11 6 7 29
23.81% 7.91% 14.29% 9.33% 10.47%
2022 4 6 7 5 22
19.05% 4.32% 16.67% 6.67% 7.94%
Audi O e sigh o Tax
2023 12317
4.76% 1.44% 7.14% 1.33% 2.53%
2022 11215
4.76% 0.72% 4.76% 1.33% 1.81%
Named Posi ion o
Tax O e sigh
2023 14207
4.76% 2.88% 4.76% 0.00% 2.53%
2022 11204
4.76% 0.72% 4.76% 0.00% 1.44%
Policy Tax T anspa ency
2023 7 18 9 14 48
33.33% 12.95% 21.43% 18.67% 17.33%
2022 6 9 7 7 29
28.57% 6.47% 16.67% 9.33% 10.47%
Economies 2025,13, 194 17 o 30
The Audi O e sigh o Tax elemen shows a ela i ely low disclosu e ac oss all coun-
ies, wi h only 2.53% o companies epo ing his elemen in 2023, al hough his ep esen s
a sligh inc ease on he p e ious yea . Singapo e leads he way in his a ea, wi h 7.14%
o companies disclosing audi o e sigh o ax ma e s, indica ing a ma ginally s onge
ole o in e nal audi s in ax adminis a ion. No all companies conduc a speci ic o e -
sigh o ax audi s, which is consis en wi h he low sco e on he Tax Audi o In o ma ion
elemen . The Named Posi ion o Tax O e sigh elemen showed a sligh imp o emen
o e all, inc easing om 1.44% in 2022 o 2.53% in 2023. Despi e his modes inc ease, his
p ac ice emains uncommon ac oss he egion, wi h Thailand epo ing no companies wi h
designa ed posi ions o ax o e sigh . This sugges s ha in mos cases, esponsibili y o
ax o e sigh is s ill handled in o mally o embedded in b oade du ies, a he han being
assigned o a clea ly de ined posi ion wi hin he o ganiza ional s uc u e. Las ly, Policy
Tax T anspa ency is he highes - alue elemen among he eigh exis ing CTAR indica o s.
Howe e , ax policies ela ed o anspa ency a e o en co po a e o mali ies disclosed in
co po a e epo ing, indica ing ha companies a e s ill in he commi men s age a he han
he implemen a ion s age (Olsen & S ekelbe g,2015).
The analysis shows bo h p og ess and pe sis en challenges in co po a e ax admin-
is a ion disclosu e in Sou heas Asia. Mos coun ies a e disclosing mo e in o ma ion,
especially Policy Tax T anspa ency, which is a sign o he inc easing impo ance o openness.
Howe e , he e a e s ill c i ical gaps in Tax Da a Ve i ica ion and Tax Audi o In o ma ion,
indica ing po en ial isks o accoun abili y in ax epo ing. In e ms o coun y di e ences,
Singapo e leads he Audi O e sigh o Tax, Indonesia excels in Policy Tax T anspa ency,
while Thailand and Malaysia a e making p og ess bu s ill lag behind in managemen
o e sigh and o malized ax unc ions. These indings sugges ha ha monized s anda ds
a e needed o inc ease anspa ency, pa icula ly in unde - epo ed a eas, while le e aging
he bes egional p ac ices o encou age wide compliance.
4.1.3. ANOVA
The esul s o he ANOVA a e p esen ed in Table 4. This es was conduc ed o compa e
he means o he a iables ac oss coun ies and indus y sec o s. On a pe -coun y basis,
all he a iables exhibi ed signi ican di e ences among he coun ies s udied. Indonesia
had he highes CTAR and CTA componen alues. The analysis o he adminis a ion
o co po a e ax e eals ha Indonesia has he highes a e age disclosu e sco e (0.128),
indica ing a s onge commi men o ax go e nance han o he coun ies. By con as ,
Malaysia (0.035) and Thailand (0.043) show signi ican ly lowe a e ages, sugges ing weake
disclosu e p ac ices in hese coun ies. The di e ences in CTAR sco es ac oss coun ies
a e s a is ically signi ican (F = 8.833, p= 0.000), highligh ing meaning ul a ia ions in he
a icula ion and disclosu e o co po a e ax policies in he egion. The analysis o co po a e
ax a oidance on a pe coun y basis e eals no able di e ences in ax beha io ac oss
Sou heas Asia. Indonesia eco ded he highes a e age CTA sco e o 0.274, sugges ing a
g ea e endency among i s companies o engage in ax minimiza ion s a egies. Malaysia
(0.242) and Thailand (0.181) also show ela i ely high le els o ax a oidance, al hough
lowe han ha in Indonesia. These indings sugges ha , while some coun ies a e
making e o s owa d imp o ed ax go e nance, ax a oidance emains p e alen in
o he s, pa icula ly in ju isdic ions whe e o e sigh and en o cemen may be less s ingen .
The ANOVA es esul s (F = 17.362, p= 0.000) con i m ha hese di e ences a e s a is ically
signi ican , unde sco ing he meaning ul a ia ion in co po a e ax a oidance beha io
ac oss he egion. Howe e , as p e iously no ed, while Indonesian ax a es a e ela i ely
high among he ou coun ies examined, he ele a ed CTAR pe cen age can be a ibu ed
o he limi ed numbe o companies.
Economies 2025,13, 194 18 o 30
Table 4. ANOVA Tes .
Va iable/Explana ion 2-Yea A e age Sco e
CTAR CTA COS POV LVG
Pe Coun y
Indonesia 0.128 0.274 22.516 0.112 0.568
Malaysia 0.035 0.242 20.566 0.086 0.600
Singapo e 0.097 0.141 22.355 0.053 0.647
Thailand 0.043 0.181 21.521 0.078 0.972
O e all 0.054 0.212 21.244 0.081 0.706
ANOVA es sco e 8.833 17.362 37.836 9.510 10.241
Sig 0.000 0.000 0.000 0.000 0.000
Pe Indus y
Financials 0.051 0.222 23.118 0.047 0.874
Indus ials 0.066 0.261 20.514 0.078 0.597
Real Es a e 0.095 0.162 21.965 0.041 0.763
Communica ion Se ices 0.000 0.182 22.088 0.065 1.077
Consume S aples 0.053 0.248 20.721 0.113 0.615
In o ma ion Technology 0.056 0.154 19.866 0.102 0.156
Consume Disc e iona y 0.019 0.200 20.502 0.102 0.836
U ili ies 0.038 0.136 22.159 0.056 1.284
Ma e ials 0.028 0.233 20.717 0.085 0.447
Ene gy 0.085 0.264 22.045 0.103 0.772
Heal h Ca e 0.016 0.234 19.903 0.127 0.528
O e all 0.054 0.212 21.244 0.081 0.706
ANOVA es sco e 2.129 5.146 21.748 12.204 7.109
Sig 0.021 0.000 0.000 0.000 0.000
Wi hin he indi idual sec o s, he analysis o CTAR disclosu e shows ha he Real
Es a e (0.095) and ene gy (0.085) sec o s ha e he highes a e age CTAR alues, which
indica es ha companies in hese sec o s a e mo e likely o o malize and disclose hei
ax policies. This is ollowed by he indus ial (0.066) and In o ma ion Technology (0.056)
sec o s, indica ing a mode a e awa eness o ax adminis a ion. No ably, he Communica-
ion Se ices sec o epo s a CTAR sco e o 0.000, indica ing no o mal ax adminis a ion
disclosu e, which could indica e a lack o anspa ency o he lowe impo ance o ax
adminis a ion. The ANOVA es (F = 2.129, p= 0.021) indica ed s a is ically signi ican
di e ences be ween he sec o s, e en hough he di e ences we e less p onounced o
CTAR han o CTA. The analysis o CTA ac oss sec o s shows ha he indus ial (0.261)
and ene gy (0.264) sec o s ha e he highes a e age CTA alues, which indica es mo e
agg essi e ax planning beha io . The Consume S aples (0.248) and Ma e ials (0.233)
sec o s also show a highe le el o ax a oidance beha io o a ious easons, such as
complex supply chains o mo e ex ensi e in e na ional ac i i ies. In con as , sec o s such
as Real Es a e (0.162) and In o ma ion Technology (0.154) show a mo e mode a e le el o
ax a oidance, while u ili ies (0.136) show he mos conse a i e app oach. The ANOVA
es (F = 5.146, p= 0.000) con i ms ha hese di e ences a e s a is ically signi ican , which
Economies 2025,13, 194 19 o 30
emphasizes ha companies’ ax a oidance is closely linked o he s uc u al and s a egic
cha ac e is ics o he indi idual sec o s.
The e a e signi ican di e ences be ween coun ies and sec o s in e ms o CTAR
and CTA, which illus a e di e en app oaches o ax adminis a ion. Indonesia p o es
o be he mos p oac i e coun y in e ms o co po a e ax adminis a ion disclosu e ( he
highes CTAR), bu i also eco ds he highes le el o ax a oidance ( he highes CTA),
an indica ion o a po en ial disconnec be ween adminis a i e commi men and ac ual
beha io . In con as , Singapo e has a mode a e CTAR le el and a lowe CTA le el,
indica ing a mo e balanced ela ionship be ween beha io and ax go e nance. F om a
sec o pe spec i e, ene gy, indus ial, and Consume S aples s and ou wi h a highe CTA
le el, which could a ac he a en ion o egula o s and aise en i onmen al, social, and
go e nance (ESG) conce ns ela ed o inancial isks and e hical beha io . Gene ally, he e
a e speci ic ax egula ions wi hin sec o s ha would esul in abno mal e ec i e ax a es.
O e all, he dis ibu ion o he ETR ac oss indus ial sec o s emains a he 20% le el, which
aligns wi h he a e age no mal ax a e in he coun ies s udied.
4.1.4. Mul iple Reg ession
P io o conduc ing he mul iple eg ession analyses, i was essen ial o pe o m clas-
sical assump ion es s. Gi en ha he da a unde examina ion comp ise combined da a
(annual a e ages), he classical assump ion es s ocus on h ee key aspec s, no mali y,
mul icollinea i y, and he e oscedas ici y, as shown in Table 5. The no mali y es using he
Kolmogo o –Smi no me hod yielded a signi icance alue o 0.007, ha is, less han 0.05,
which indica es ha he esiduals a e no no mally dis ibu ed. Howe e , non-no mali y
in he eg ession es can be dis ega ded because he sample size exceeds 200 obse a-
ions, as achie ing no mali y in la ge samples is challenging because o he asymp o ic
na u e o he es s a is ics. Mul icollinea i y es s yielded Va iance In la ion Fac o (VIF)
alues be ween 1.124 and 1.481, which a e well below he c i ical h eshold o 10. This
indica es ha mul icollinea i y is no a p oblem, and ha he independen a iables a e
no s ongly co ela ed wi h each o he ; his assump ion is ul illed. The he e oscedas ic-
i y es esul ed in a signi icance alue o 0.01, which was less han 0.05, indica ing he
p esence o he e oscedas ici y. He e oscedas ici y is add essed h ough he applica ion o
he Hube –Whi e he e oscedas ici y e o co ec ion, which s a is ically adjus s eg ession
models exhibi ing he e oscedas ici y. Because wo o he h ee classical assump ion es s
a e sa is ied, he eg ession analysis can be con inued app op ia ely.
Table 5. Classical assump ion es .
Classical Assump ion Tes Sco e C i e ia o Good Fi Tes Resul
No mali y es (Kolmogo o –Smi no es ) 0.007 sig > 0.05 No passed
Mul icollinea i y es (Va iance In la ion Fac o )
1.124–1.481 VIF < 10 Passed
He e oscedas ici y es (Hube –Whi e es ) 0.01 sig > 0.05 No passed
The mul iple eg ession analysis in Table 6p o ides in o ma ion on he ac o s ha
in luence CTA. The model yielded an adjus ed R-squa ed o 0.021, which means ha
only 2.1% o he a ia ion in CTA was explained by he independen a iable, CTAR,
and he con ol a iables, COS, POV, and LVG. Despi e he low explana o y powe , he
o e all model was s a is ically signi ican a he 5% le el (F-s a is ic = 2.455, p= 0.046),
indica ing ha he independen a iables had an o e all signi ican ela ionship wi h CTA.
The CTAR a iable exhibi s a posi i e coe icien , indica ing ha an inc ease in a company’s
ax adminis a ion alue co esponds o a highe e ec i e ax a e, implying a educed
Economies 2025,13, 194 20 o 30
likelihood o ax a oidance by he company. CTAR signi ican ly in luenced CTA, he eby
suppo ing Hypo hesis 1. Among he h ee con ol a iables, only COS was s a is ically
signi ican , whe eas POF and LVG we e no s a is ically signi ican . The nega i e coe icien
o COS sugges s ha companies wi h subs an ial co po a e asse s end o ha e a lowe
e ec i e ax a e, indica ing ax a oidance. This obse a ion is plausible, because he
company’s asse s e lec i s subs an ial economic capaci y, making ax sa ings mo e c i ical
o such en i ies (Hossain e al.,2024).
Table 6. Mul iple eg ession analysis esul s.
Va iable Coe icien S d. E o -S a is ic P ob.
C 0.402 0.102 3.929 0.000
CTAR 0.058 0.022 2.582 0.010
COS −0.009 0.005 −2.002 0.046
POV −0.158 0.127 −1.240 0.216
LVG 0.011 0.010 1.135 0.257
Adjus ed R-squa ed 0.020652
F-s a is ic 2.455013
P ob (F-s a is ic) 0.046134
4.1.5. Logis ic Reg ession
Logis ic eg ession analysis was pe o med o e alua e Hypo hesis 2. This me hod
does no equi e he applica ion o classical assump ion es s, allowing o di ec examina-
ion o he cons uc ed logis ic eg ession model. Table 7p esen s he esul s o his analysis.
Table 7. Logis ic eg ession analysis esul s.
Va iable Coe icien S d. E o z-S a is ic P ob.
C−15.938 2.593 −6.147 0.000
CTA 3.478 1.442 2.412 0.016
COS 0.589 0.111 5.296 0.000
POV 7.618 2.657 2.867 0.004
LVG 0.112 0.228 0.489 0.625
McFadden R-squa ed 0.152089
H-L s a is ic 9.7884
P ob. Chi-Sq(8) 0.2802
LR s a is ic 36.88351
P ob (LR s a is ic) 0.000
Howe e , he logis ic eg ession model was e alua ed using he McFadden and
Hosme –Lemeshow es s. The McFadden R-squa ed alue is 0.152, which is modes
bu accep able o logis ic eg ession models and sugges s an app op ia e i o be-
ha io al o adminis a ion- ela ed ou comes. The esul o he Hosme –Lemeshow es
(
H-L s a is ic = 9.7884
,p= 0.2802) was no signi ican and indica ed a good i o he model.
The p edic ed alues ag eed well wi h he obse ed da a, sugges ing ha he model was
adequa ely i ed o analysis.
The logis ic eg ession model was s a is ically signi ican o e all, wi h a Likelihood
Ra io (LR) s a is ic o 36.88 (p= 0.000), indica ing ha he p edic o s join ly con ibu e
Economies 2025,13, 194 21 o 30
meaning ully o explaining he ou come. The esul s e ealed ha he e ec o CTA on he
CTAR was s a is ically signi ican . A posi i e coe icien indica es ha a lowe le el o ax
a oidance (cha ac e ized by a highe CTA alue) leads o a mo e s ingen adminis a ion
o co po a e ax. Among he h ee con ol a iables, only COS and POF a e signi ican ,
demons a ing he posi i e in luence o asse s and p o i abili y on he adminis a ion o
co po a e ax. Con e sely, LVG did no ha e a signi ican e ec on CTAR. I is e iden ha
he adminis a ion o co po a e ax ep esen s an in es men ha equi es in eg a ion in o
a company’s in o ma ion sys ems, go e nance, and ope a ional p ocedu es, which equi es
subs an ial esou ces and a o able company condi ions o e ec i e implemen a ion (Xu
e al.,2023).
4.1.6. Robus ness Tes : Simul aneous Equa ion Model
Table 8p esen s he esul s o he simul aneous equa ion es s. Fo Hypo hesis
1, he eg ession esul s show ha he RES1 a iable is s a is ically signi ican a he
5% le el ( -s a is ic =
−
3.977, p= 0.000). The coe icien o CTAR was also signi ican
(
coe icien = 0.693
, -s a is ic = 4.302, p= 0.000). The di ec ion o his coe icien was
consis en wi h he esul s epo ed in Table 6, con i ming ha CTAR is endogenous o
CTA. Fo Hypo hesis 2, he ini ial eg ession esul s indica ed a “comple e sepa a ion
de ec ed a he es ima ed pa ame e ” wa ning, sugges ing ha he esul s may no be alid.
The e o e, a obus ness es was conduc ed using a Linea P obabili y Model (LPM) as
an al e na i e. Al hough no ideal, OLS wi h CTAR as he dependen a iable can se e
as a allback when nonlinea models ail because o sepa a ion issues (Bun & Ha ison,
2018). The eg ession esul s show ha he RES2 a iable is s a is ically signi ican a
he 5% le el (
-s a is ic = −7.110,
p= 0.000). The coe icien o CTA was also signi ican
(
coe icien = 4.886
, -s a is ic = 7.333, p= 0.000). The di ec ion o his coe icien aligns wi h
he indings in Table 7, con i ming ha CTA is endogenous o he CTAR. Based on hese
es s, i can be concluded ha a simul aneous ela ionship exis s be ween CTAR and CTA.
Table 8. Simul aneous equa ion model esul s (s age 2 only).
Va iable Coe icien S d. E o -S a is ic P ob.
Fo he 1s hypo hesis (dependen a iable = CTAR)
C 1.387 0.268 5.171 0.000
CTAR 0.693 0.161 4.302 0.000
COS −0.057 0.013 −4.406 0.000
POV −0.751 0.195 −3.851 0.000
LVG 0.009 0.010 0.906 0.365
RES1 −0.638 0.160 −3.977 0.000
Fo he 2nd hypo hesis (dependen a iable = CTAR)
CTA 4.886 0.666 7.333 0.000
COS −0.038 0.006 −5.915 0.000
POV −0.466 0.313 −1.484 0.139
LVG −0.007 0.031 −0.228 0.820
RES2 −4.886 0.687 −7.110 0.000
4.2. Discussion
In gene al, he esul s show ha he e is a simul aneous ela ionship be ween he
adminis a ion o co po a e ax and co po a e ax a oidance. Be o e discussing he esul s
Economies 2025,13, 194 22 o 30
o he hypo hesis es ing o each model, he e a e se e al in e es ing poin s in his esea ch.
Fi s , his s udy p o es ha he disclosu e o co po a e ax adminis a ion in Indonesia,
Malaysia, Singapo e, and Thailand is s ill e y low; he le el o disclosu e is be ween 0
and 20%. Disclosu e is mos ly pe o med only in ax adminis a ion commi men s and
s a emen s and has no ye en e ed he co e aspec s o ax supe ision by he company o
in o ma ion ela ed o special co po a e ax audi s. Co po a e go e nance and owne ship
s uc u e play signi ican oles in de e mining disclosu e le els. Fi ms s a egically manage
hei disclosu e en i onmen s o o se hei po en ial epu a ional cos s. When manda o y
disclosu es a e incomple e, companies may olun a ily issue addi ional in o ma ion o
main ain con ol o e hei disclosu e na a i es (Kays,2021). This selec i e disclosu e
app oach can esul in lowe o e all anspa ency, pa icula ly ega ding ax policies. The
ascension o co po a e gene al counsel (GC) o op managemen is associa ed wi h in-
c eased ax agg essi eness, including g ea e book– ax di e ences and a highe likelihood
o engaging in ax shel e ac i i ies (Bagnoli & Wa s,2007). This con adic s he expec a ion
ha ha ing a GC in he op managemen would lead o mo e conse a i e ax p ac ices
and inc eased disclosu e. P e ious esea ch shows ha he low le el o co po a e ax ad-
minis a ion disclosu e in some companies can be a ibu ed o ac o s such as concen a ed
owne ship, he s a egic managemen o disclosu e en i onmen s, and he ine ec i eness
o ce ain go e nance mechanisms in p omo ing anspa ency (Hassan e al.,2008;Kolsi,
2017;Mgammal e al.,2018).
Second, his s udy p o es ha he good adminis a ion o co po a e ax can educe
ax a oidance in companies. The good adminis a ion o co po a e ax, pa icula ly when
aligned wi h co po a e social esponsibili y (CSR) p inciples, can help mi iga e agg essi e
ax a oidance. Rudyan o (2024) demons a es ha disclosing ax paymen s in Global
Repo ing Ini ia i e (GRI)-based sus ainabili y epo s educes agg essi e ax a oidance.
This sugges s ha anspa ency and accoun abili y in ax epo ing as pa o a b oade
CSR s a egy can discou age companies om engaging in excessi e ax a oidance p ac ices.
The good adminis a ion o co po a e ax can con ibu e o educing ax a oidance, and i s
e ec i eness may depend on a ious ac o s, including he exis ing le el o ax a oidance,
he speci ic policies implemen ed, and he b oade co po a e go e nance amewo k.
Inco po a ing ax planning in o co po a e social esponsibili y amewo ks— e med “good
ax go e nance”—can os e a mo al mindse and enhance accoun abili y and anspa ency,
po en ially leading o mo e esponsible ax p ac ices (G ibnau & Jallai,2017). Thi d, his
s udy p o es ha companies ha engage in ax a oidance end o ha e a low le el o
co po a e ax adminis a ion disclosu e. Co po a e ax a oidance is o en associa ed wi h
educed anspa ency and disclosu es. Companies in ol ed in agg essi e ax planning
may be eluc an o p o ide de ailed in o ma ion on hei ax s a egies o a oid sc u iny
(Oa s & Tuck,2019). The lack o anspa ency in ax a ai s can be seen as a way o i ms
o conceal hei ax a oidance ac i i ies om s akeholde s and egula o s. Resea ch has
shown ha ax a oidance beha io can inc ease agency cos s and educe i ms’ alue,
pa icula ly in con ex s wi h weake go e nance s uc u es (Chen e al.,2014). To mi iga e
hese nega i e e ec s, companies engaging in ax a oidance may choose o limi hei ax
adminis a ion disclosu es in o de o a oid d awing a en ion o hei p ac ices. This
indica es ha i ms engaging in ax a oidance may p io i ize o he o ms o disclosu e o e
speci ic ax adminis a ion disclosu es o main ain hei legi imacy. The in oduc ion o
coun y-by-coun y epo ing (CbC ) equi emen s has been shown o inc ease e ec i e ax
a es among a ec ed i ms (Joshi,2020). This inding sugges s ha inc eased disclosu e
equi emen s can de e ax a oidance, implying ha companies engaging in such p ac ices
may p e e o main ain lowe le els o ax adminis a ion disclosu e. Companies engaging
in ax a oidance end o ha e lowe le els o co po a e ax adminis a ion disclosu e, as
Economies 2025,13, 194 23 o 30
hey seek o minimize sc u iny, main ain legi imacy, and a oid he po en ial nega i e
consequences associa ed wi h hei ax planning s a egies (Payne & Raibo n,2015;Dy eng
e al.,2016;O e esch & Wol ,2021).
Fou h, he con ol a iable in he i s model esul s shows ha companies’ size and
p o i abili y a ec he c ea ion o he good adminis a ion o co po a e ax, bu le e age
has no e ec on he c ea ion o he good adminis a ion o co po a e ax. This sugges s ha
la ge i ms may ha e mo e esou ces and oppo uni ies o implemen sophis ica ed ax
s a egies, hus in luencing hei ax adminis a ion decisions (Shubi a,2024). P o i abili y
also has a signi ican e ec on ax- ela ed decisions. P o i able companies may ha e g ea e
incen i es and means o de elop ax policies ha minimize hei ax bu den (Rego,2010).
Fi h, he con ol a iables in he second model also show ha companies wi h la ge
asse s end o p ac ice ax a oidance, while p o i abili y and le e age ha e no e ec on
he le el o co po a e ax a oidance. La ge i ms ha e access o be e ax expe ise, mo e
complex o ganiza ional s uc u es, and a g ea e abili y o shi p o i s ac oss ju isdic ions,
enabling hem o educe hei e ec i e ax a es (Hossain e al.,2024). As Ala ussi and Gao
(2021) sugges , he e migh be an in e ed U-shaped ela ionship be ween le e age and
p o i abili y, which depends on he balance be ween he bene i s and cos o deb . This
complexi y could explain why some s udies ound signi ican ela ionships, while o he s
did no .
Fi h, he in e ac ion be ween he adminis a ion o co po a e ax (CTAR) and co po a e
ax a oidance (CTA), measu ed using he e ec i e ax a e (ETR), p esen s no able a ia ion
ac oss he ou Sou heas Asian coun ies included in his s udy: Indonesia, Malaysia,
Singapo e, and Thailand. In his esea ch con ex , a highe ETR e lec s a lowe deg ee o
ax a oidance, indica ing a g ea e deg ee o ax compliance. Among he coun ies analyzed,
Indonesia demons a ed he highes a e age alues o bo h CTAR (0.128) and CTA (0.274).
This inding sugges s a s ong alignmen be ween enhanced ax adminis a i e p ac ices and
educed ax a oidance. This esul may e lec Indonesia’s ecen e o ms o s eng hen i s
ax au ho i y, expand digi al epo ing sys ems, and inc ease i s audi co e age (Hu agaol,
2025). This consis ency suppo s he hypo hesis ha imp o emen s in ax adminis a ion
a e associa ed wi h inc eased ax compliance. By con as , Singapo e showed a di e gen
pa e n. Al hough i eco ded a mode a ely high CTAR sco e (0.097), i also showed
he lowes CTA alue (0.141), implying highe le els o ax a oidance. Howe e , his
obse a ion should no be in e p e ed as an indica ion o adminis a i e weaknesses.
Ra he , i likely e lec s he unique ea u es o Singapo e’s ax egime, which is cha ac e ized
by in e na ionally compe i i e ax incen i es, obus ax planning amewo ks, and he
widesp ead use o legally sanc ioned mechanisms such as ax holidays and p e e en ial a es
o in ellec ual p ope y income (Dille e al.,2025). These policy ins umen s con ibu e
o lowe ETRs wi hou necessa ily indica ing noncompliance o agg essi e ax beha io .
Malaysia and Thailand occupy in e media e posi ions. Malaysia has a ela i ely low
CTAR (0.035) wi h a mode a e CTA (0.242), sugges ing ha ac o s beyond o mal ax
adminis a ion, such as indus y-speci ic ax incen i es, olun a y compliance beha io , o
i m-le el go e nance mechanisms, may in luence co po a e ax p ac ices (Cheong e al.,
2020). Simila ly, Thailand has a low CTAR sco e (0.043) and mode a ely low CTA (0.181),
po en ially e lec ing limi a ions in ax en o cemen capaci y and compliance o e sigh
(Nkundabanyanga e al.,2017). The mixed pa e n obse ed in hese wo coun ies poin s
o he possibili y o mode a ing e ec s om ins i u ional, poli ical, o sec o al a iables ha
shape he ax compliance en i onmen . Collec i ely, hese indings ein o ce he no ion ha
he ela ionship be ween ax adminis a ion and ax a oidance is con ex -speci ic and is
shaped by ins i u ional, egula o y, and ma ke dynamics. S eng hening he adminis a ion
o co po a e ax is a i al mechanism o p omo ing compliance in ju isdic ions such as
Economies 2025,13, 194 24 o 30
Indonesia and Thailand, whe e he ax en o cemen capaci y may e ol e. In con as , in
high-go e nance coun ies, such as Singapo e, lowe ETRs may be a ibu able o policy-
d i en ax planning s a egies a he han weak adminis a ion, highligh ing he dis inc ion
be ween adminis a i e en o cemen and in en ional ax compe i i eness.
Six h, al hough he adjus ed R
2
and McFadden R
2
alues in his s udy a e ela i ely
low (0.02 and 0.15, espec i ely), his does no diminish he alidi y o he analysis. In
beha io al and go e nance- ela ed esea ch, pa icula ly in he a ea o ax a oidance, i is
common o encoun e a low explana o y powe owing o he complexi y and unobse abil-
i y o manage ial decision-making, i m-speci ic s a egies, and egula o y en i onmen s
(Khu ana e al.,2018). The p ima y objec i e o his s udy is no o p edic ou comes wi h
high p ecision bu o examine s a is ically signi ican and heo e ically g ounded ela ion-
ships be ween he adminis a ion o co po a e ax and ax a oidance. Low R
2
alues a e
accep able in his con ex , as long as he es ima ed coe icien s a e consis en , obus , and
aligned wi h he heo y. Fu he mo e, he inclusion o endogenei y- obus es ima o s, such
as he con ol unc ion app oach and ins umen al a iables, enhances he c edibili y o he
indings, despi e he modes a iance explained by he model.
5. Limi a ions
Despi e he con ibu ions o his s udy o he unde s anding o he adminis a ion o
co po a e ax and ax a oidance in Sou heas Asia, se e al limi a ions mus be acknowl-
edged. These limi a ions ela e p ima ily o he na u e o he da a, measu emen p oxies,
and me hodological scope, and hey o e a enues o u u e esea ch o build upon and
s eng hen he indings p esen ed he e
Fi s , his s udy ocuses exclusi ely on ax a oidance, which in ol es he legal use o
ax planning s a egies o minimize ax liabili ies. I is impo an o dis inguish his om
ax e asion, which e e s o illegal ac ions such as concealing income o alsi ying eco ds.
Since he da a used in his esea ch a e based on he publicly disclosed inancial s a emen s
o lis ed i ms, he analysis does no and canno cap u e ax e asion beha io s. Fu u e
esea ch examining ax e asion would equi e access o en o cemen , audi , o con iden ial
adminis a i e da a ypically held by ax au ho i ies.
Second, he use o he e ec i e ax a e (ETR) as a p oxy o ax a oidance is based on
inancial da a epo ed a he ju isdic ional le el. As such, his me ic does no accoun o
p o i s shi ed ab oad h ough ans e p icing mechanisms, which a e widely ecognized as
he p ima y ax a oidance s a egy among mul ina ional i ms in Sou heas Asia. Fu he -
mo e, he ETR e lec s ax paid on income al eady shi ed ou o he epo ing ju isdic ion,
a he han p e-shi income. Due o he lack o access o consolida ed global inancial
epo s o coun y-by-coun y epo ing (CbCR) disclosu es, his s udy elies on na ional-
le el da a. Fu u e esea ch may imp o e i s accu acy by using g oup-le el inancial da a,
OECD CbCR ilings (whe e a ailable), o al e na i e p oxies such as book– ax di e ences,
cash ETR, o measu es ha adjus o in e company ansac ions and ax ha en exposu e.
Thi d, some obse ed educ ions in ETR may s em no om agg essi e a oidance
bu om go e nmen -sanc ioned ax incen i es, such as R&D deduc ions, ax holidays, o
accele a ed dep ecia ion policies. These policy-induced educ ions a e in ended ou comes
o economic s a egies a he han indica o s o a oidance. Wi hou g anula disclosu e on
ax expendi u es, i is di icul o disen angle s a egic a oidance om policy incen i es.
Fu u e esea ch should conside con olling o he p esence o such incen i es o analyzing
oo no es and segmen disclosu es ha explain he composi ion o he ax bu den.
Fou h, he measu emen o he adminis a ion o co po a e ax (CTAR) is de i ed om
disclosu e-o ien ed indica o s a ailable in he Re ini i Eikon da abase. These indica o s
a e based on i ms’ olun a y disclosu es and may e lec epu a ional o in es o - ela ions
