The relationship between companies characteristics and tax Incentive: Listed manufacturing companies in Malaysia

• Main Author: Mufidah Syafiqah, Mihat
• Format: Thesis
• Language: English; English
• Published: 2022
• Subjects: HJ Public Finance
• Online Access: https://etd.uum.edu.my/10697/1/s828410_01.pdf; https://etd.uum.edu.my/10697/2/s828410_02.pdf; https://etd.uum.edu.my/10697/

Tax incentive is very useful for companies in tax planning for minimizing their tax liability. However, there is a concern in the complexity of the tax incentives procedures, as a result most of the application are from MNCs. This raise question whether the tax incentives available are fairly benefits to all companies, especially the new and SMEs especially manufacturing companies as one the industries that have intensity in capital expenditure. The purpose of this study is to identify the relationship between company characteristics and tax incentive of Malaysian manufacturing companies listed on KLSE. About five hundred forty three (543) annual reports were analysed in this study for both descriptive and regression analysis. The annual reports were extracted from Bursa Malaysia, which focusing from year 2017 until 2019. This study found that firm size, profitability and leverage have significant impact on tax incentive (proxied by the effective taxnrate). Firm size measured by total share outstanding has been found to have positive significant relationship with tax incentive. While, firm profitability measured by ROA has been found to have negative significant relationship with tax incentive; and in contrast ROE has positive significant impact on tax incentive. Other factors such as Big4 audit firm and firm size (measured by total asset and revenue) have no significant relationship at all. Results also revealed that the average effective tax rate of firm-year observations is more than standard tax rate of Malaysia at 24% which implies that the level of tax incentive application and utilization is still at low level where it could not minimize companies’ tax liability suggesting low tax planning activities.