Thin Capitalization, Tax Haven Utilization, and Political Connections: Their Collective Impact on Corporate Tax Aggressiveness

Abstract

This study examines the impact of thin capitalization, tax haven
utilization, and political connections on corporate tax
aggressiveness. The research focuses on manufacturing firms
within the consumer goods sector listed on the Indonesian Sharia
Stock Index (ISSI) from 2019 to 2023. The study employs a
quantitative approach using secondary data. A non-probability
sampling method, specifically purposive sampling, is applied,
resulting in a final sample of 12 companies with a total of 60 firm
year observations. To analyze the data, multiple linear regression
is conducted using SPSS software. The findings indicate that thin
capitalization and tax haven utilization do not significantly
influence tax aggressiveness. However, political connections
exhibit a positive and significant relationship with tax
aggressiveness, suggesting that politically connected firms are
more likely to engage in aggressive tax planning strategies.