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Comparative Analysis of Companies’ Financial Performance Before and After an Increase in Value-Added Tax Rate: Evidence from Indonesia

Author

Listed:
  • Azhar Mauli Siregar

    (Accounting Department, Bakrie University, Jakarta, Indonesia)

  • Tita Djuitaningsih

    (Accounting Department, Bakrie University, Jakarta, Indonesia)

  • Sylvia Fettry

    (Accounting Department, Parahyangan University, Bandung, Indonesia)

Abstract

This study aims to analyze the differences in the financial performance of companies in the consumer cyclicals sector before and after the implementation of the value-added tax rate increase policy to 11%. The strong protests from businesses and the public against this policy, coupled with the government's plan to raise the value-added tax rate again to 12%, as well as the lack of research addressing this topic, motivated this study to examine the differences in the financial performance of consumer cyclicals companies before and after the increase in the value-added tax rate. Financial performance in this study is represented by profitability, liquidity, and solvency. Profitability is proxied by return on equity, liquidity by the quick ratio, and solvency by the debt-to-equity ratio. The population of this study is 141 consumer cyclicals companies listed on the Indonesia Stock Exchange over eight quarters, from the 2nd quarter of 2021 to the 1st quarter of 2023. The sampling technique used is purposive, yielding a sample of 95 companies. The analysis method used is the paired-samples t-test in SPSS version 25. The results of this study indicate that there is no difference in return on equity before and after the increase in the value-added tax rate. However, there are differences in the quick ratio and debt-to-equity ratio before and after the increase in the value-added tax rate.

Suggested Citation

  • Azhar Mauli Siregar & Tita Djuitaningsih & Sylvia Fettry, 2026. "Comparative Analysis of Companies’ Financial Performance Before and After an Increase in Value-Added Tax Rate: Evidence from Indonesia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 10(3), pages 152-172, March.
    • Handle: RePEc:bcp:journl:v:10:y:2026:i:3:p:152-172
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    References listed on IDEAS

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    4. Dedola, Luca & Osbat, Chiara & Reinelt, Timo, 2022. "Tax thy neighbour: Corporate tax pass-through into downstream consumer prices in a monetary union," Working Paper Series 2681, European Central Bank.
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