PROPOSE: FAMILY OWNERSHIP, POLITICAL CONNECTIONS AND TAX AGGRESIVENESS

Abstract

Tax amnesty on 2017 reached 40% of Indonesia's GDP, that proves many Indonesian companies taking advantage of existing tax regulatory loopholes. 50% of Indonesian companies have a family ownership structure. That should be minimized tax aggressiveness because family companies more conservative and see long-term effects. The uniqueness of family ownership companies in running their business is interesting to see how the effect on tax aggressiveness. This study also aims to prove effects political connections to family relations with tax aggressiveness. This research aims to prove how family ownership and political connection effects tax aggressiveness. This research contributed by focuses on looking at the magnitude of political connection that each level of government. So it will be known at which level of government this political connection variable has a greater effect. This research contains all non-financial listed companies on Indonesia Stock Exchange from 2017 to 2019 by using purposive sampling method and regression for data analysis. Tax aggressiveness is measured through Current Effective Tax Rate (CETR). The results found that family ownership has negative effects on tax aggressiveness. These results indicate that the company is trying to maintain family wealth. In addition, political connections influence the relationship of family ownership and tax aggressiveness The proxies developed by Chen et al (2017) could shed new light on how powerful political connections are effects tax aggressiveness.