Monday September 27th 2021

Book-Tax Gap: Evidence From Indonesia

Dwi Martani, Yulianti Anwar, Debby Fitriasari

Universitas Indonesia, Depok, Indonesia


This research investigates factorc affecting the book tax gap in Indonesia. Indonesian tax law limit the discretion used by management in calculating the income, therefore, the difference between accounting income and taxable income is considered to be a potential sign of earnings management. We analyze several factors that-based on previos research-affect earnings management practice, such as company’s size, level of leverage, level of capital intensity, level of inventory intensity, number of affiliation, and profitability. We also use other proxy of earnings management, such as Total Accruals and the existence of Tax Assessment Letter from Tax Officials. Using the 10 years’ data from 1999-2008, we find that factors affecting boox tax gap in Indonesia is total accrual and size. This shows that menagement discretion that reflected in total accruals will affect the level of company’s book tax gap, along with the sizeof the company. This means the bigger the size of a companyin Indonesia, the better the monitoring conducted that lead to lower book tax gap. this finding will give insight to accounting researchers towards the earnings management practice and the use of book tax gap in developing country.

Keywords: tax, book tax gap, earnings management, accrual, Indonesia


Dimuat dalam Jurnal China-USA Business Review, Vol. 10, No. 4, April 2011. Penerbit : David Publishing Company, ISSN 1537-1514, Terindeks di EBSCO, ProQuest/CSA, Hal. 278 – 284. Book Tax Gap…

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