Determinants of Corporate Income Tax Payable to Chemical Sector Manufacturing Companies Listed on the Indonesia Stock Exchange

Abstract

Purpose: This study aims to analyze the effect of profitability, tax planning, and capital structure on corporate income tax payable in chemical manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2024 period.

Methodology/approach: This study employs a quantitative research approach, utilizing secondary data derived from annual financial reports obtained from the official IDX website and company websites. The sample was selected using purposive sampling, resulting in 7 companies observed over 5 years (2020–2024), yielding a total of 35 observations. Data analysis techniques employed include descriptive statistics, classical assumption tests, multiple linear regression analysis, and hypothesis testing (t-test and F-test), utilizing SPSS software.

Results/findings: The results show that, partially, profitability has a significant effect on corporate income tax payable, while tax planning and capital structure have no significant effect. However, simultaneously, all three independent variables have a significant effect on corporate income tax payable.

Conclusions:  These findings indicate that profitability is the primary factor determining the amount of tax liability. In contrast, the effectiveness of tax planning and capital structure does not consistently contribute to reducing the tax burden.

Limitations: This study was only able to explain the influence of profitability, tax planning, and capital structure on the income tax of 13.6% of outstanding entities. This means that 86.4% of other variables outside the model can still affect the amount of tax payable.

Contribution: This research provides evaluation material for manufacturing companies to develop optimal financial and tax strategies. This research makes a theoretical contribution to the development of accounting and taxation science, particularly in understanding the relationship between profitability, tax planning, and capital structure in relation to the income tax of debt-issuing entities.