The Effect of Capital Intensity on Tax Aggressiveness with Political Connections as Moderation

Abstract

The objective of this study is to examine the impact of capital intensity on tax aggressiveness while incorporating political relationships as a moderating variable for companies in the industrial sector listed on the Indonesia Stock Exchange (IDX) from 2019 through 2023. Utilizing a quantitative design, the research draws on secondary sources. A purposive sampling technique was employed to select 14 firms that satisfied the criteria. The analysis involved descriptive methods, panel regression model determination through Chow and Hausman tests, and hypothesis testing with t-statistics in a random effect model. Moderated Regression Analysis (MRA) was used to process all the data. Findings reveal that individually, capital intensity and political networks do not significantly affect tax aggressiveness. Moreover, the moderating effect of political connections on the link between capital intensity and tax aggressiveness was also insignificant. In practical terms, these outcomes imply that policymakers and tax officials should not emphasize capital intensity or political ties exclusively when detecting tax aggressiveness.