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Macroeconomic Determinants of Tax Avoidance and the Moderating Role of Public Governance

Author

Listed:
  • Indriyana Puspitosari
  • Hadri Kusuma
  • Johan Arifin

Abstract

Tax avoidance refers to the implementation of a strategy by companies aimed at lowering their tax responsibilities. This research explores the impact of macroeconomic variables, namely the statutory tax rate, inflation, and policy uncertainty. This study integrates public governance as a moderating variable. The research focuses on non-financial firms sampled from five ASEAN countries: Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. From the panel data regression analysis of 11,631 observations, it was found that the statutory tax rate, inflation, and policy uncertainty contribute to higher levels of corporate tax avoidance in five ASEAN countries. Moreover, the study shows that the presence of public governance moderates the relationship between corporate income tax rates, inflation, and policy uncertainty, thereby weakening corporate tax avoidance practices. The implications of this research are important for both companies and governments. For companies, the results suggest that policies should take into account both macroeconomic and institutional environments. For governments, strengthening institutional frameworks is essential to boosting tax revenue collection.

Suggested Citation

  • Indriyana Puspitosari & Hadri Kusuma & Johan Arifin, 2026. "Macroeconomic Determinants of Tax Avoidance and the Moderating Role of Public Governance," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 20-37.
    • Handle: RePEc:bas:econst:y:2026:i:1:p:20-37
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    File URL: http://archive.econ-studies.iki.bas.bg/2026/2026_01/2026_01_02.pdf
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    More about this item

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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