The influence of firm size, profitability, capital intensity and leverage towards corporate tax avoidance in Malaysia

Tax avoidance refers to the use of legal loopholes to legitimately reduce the size of one tax liability within the law. In Malaysia, although tax collection increase over the years, the number of tax defaulters are also on the rise. Tax avoidance issue has become a problem in achieving realistic tax collection since tax collection is one of the primary sources of income to the government. Hence, this study aims to examine the firm characteristic that influence corporate tax avoidance which are firm size, profitability, capital intensity and leverage towards corporate tax avoidance in Malaysia measured by their effective tax rates (ETRs). This study utilized data from financial statement of family firms and government linked companies (GLCs) listed in Bursa Malaysia year 2015. The findings suggest that firm size, profitability and leverage were insignificant influence on corporate tax avoidance in family firms and GLCs in Malaysia. However, this study provide evidence that capital intensity has
statistically significant result; suggesting that family firms and GLCs with higher capital intensive may associated with corporate tax avoidance in Malaysia.