The Affects of Profitability, Leverage, and Liquidity on Tax Avoidance

Abstract

Abstract: Taxes are an integral part of the economic structure of a country and make an important contribution as a source of revenue for the government. Amid the complexity of tax rules, companies have room to manage their taxes efficiently, including tax avoidance practices to optimize tax benefits and increase net profits. Factors such as profitability, leverage, and liquidity play a key role in a company's decision regarding tax avoidance. Relevant previous research and research have a very important role in the process of preparing scientific articles. For this reason, this literature review article aims to analyze how the relationship between these three factors with corporate tax avoidance practices, in order to compile hypotheses in future research. The results obtained from this literature review article are: 1) Profitability affects Tax Avoidance; 2) Leverage affects Tax Avoidance; and 3) Liquidity affects Tax Avoidance.

Keyword:  Tax, Tax Avoidance, Profitability, Leverage, and Liquidity