A The Effect Of Sustainability Report Quality On Tax Avoidance With Profitability As A Mediating Variable In Basic Materials Sector Companies:

Erry Arifian; Acep Komara

doi:10.63922/ijebir.v5i04.3780

Erry Arifian Faculty of Economics and Business, Swadaya Gunung Jati University.
Acep Komara Faculty of Economics and Business, Swadaya Gunung Jati University.

DOI: https://doi.org/10.63922/ijebir.v5i04.3780

Keywords: Sustainability Reporting Quality, Tax Avoidance, Profitability, Basic Materials Sector, Legitimacy Theory.

Abstract

This study aims to analyze the influence of sustainability reporting quality on tax avoidance by considering the role of profitability as a mediating variable in basic materials sector companies in Indonesia. The background of this research is based on the issue of moral inconsistency where companies often claim sustainability practices but engage in tax aggressiveness, as well as the lack of empirical evidence regarding the role of profitability in this mechanism following the implementation of POJK No. 51 of 2017. This study employs a quantitative approach with a causal associative design. The population comprises basic materials sector companies listed on the Indonesia Stock Exchange (IDX) for the 2022–2024 period. Through purposive sampling technique, 30 companies were selected, resulting in a total of 90 observations. Data analysis was conducted using multiple linear regression and mediation tests. The results indicate that sustainability reporting quality has a significant negative effect on tax avoidance. However, sustainability reporting quality proved to have no significant effect on profitability. Furthermore, this study found that profitability does not mediate the relationship between sustainability reporting quality and tax avoidance. These findings support Legitimacy Theory, suggesting that corporate decisions to comply with tax obligations are driven by ethical motives, transparency, and reputation, rather than by short-term financial performance mechanisms.

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