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ASEAN Journal on Science and Technology for Development

Abstract

Taxes are the primary source of revenue for many nations in order to increase budget revenues and fund national development. Taxation serves multiple purposes because it can positively impact a nation's investment, education, social and economic development. However, tax authorities require assistance with the issue of tax non-compliance, which impedes tax administration and collection. One of the categories of tax non-compliance is tax avoidance, which is one of the company's strategies for legally reducing its tax burden by exploiting loopholes in tax regulations to minimise tax liability. Tax avoidance is when a company follows a particular tax strategy in the hopes that the tax measures will not be legally audited or questioned, but the action is risky if the tax methods are considered unlawful. Although the implementation of corporate governance practices within listed firms, the issue of corporate taxation revenues in Malaysia remains a cause for concern, as they constitute a significant portion of the government's overall income collection. Therefore, effective governance practices may offer improved tax avoidance oversight among Malaysian companies which in turn improve the company’s integrity and in line with the national SDGs agenda. However, embedding good governance practices among common governance mechanism studies in monitoring tax avoidance is still scarce, particularly in an emerging country, Malaysia. This study investigates the impact of corporate governance monitoring mechanisms on tax avoidance. The secondary data analysis will be conducted based on the reported financial statements by Malaysian listed companies from 2018 until 2022 (5 years). STATA Software will be used to analyse the data for this study. The findings of this study may show how the corporate governance monitoring mechanisms determine whether a company's management operates in the best interests of its shareholders and whether tax avoidance options are utilised in the shareholders' best interests.

Keywords

Tax avoidance, Corporate Governance, Corporate Governance mechanisms

Publication Date

2024

Received Date

23-Oct-2023

Revised Date

2-Jan-2024

Accepted Date

28-Feb-2024

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