p–ISSN: 2723 - 6609 e-ISSN: 2745-5254

Vol. 5, No. 10, October 2024 http://jist.publikasiindonesia.id/

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4665

Analysis of the Influence of Capital Intensity, Inventory

Turnover (ITO) and Return on Assets (ROA) on the Effective

Tax Rate (Etr) with Institutional Ownership as a Moderating

Variable

Nur Azizah Mariani

Universitas Trisakti, Indonesia

Email: [email protected]

*Correspondence

ABSTRACT

Keywords: effective tax

rate, capital intensity,

return on assets, inventory

turnover (ITO),

institutional ownership.

This research aims to determine the effect of capital

intensity, inventory turnover (ITO), and return on assets

(ROA) on the effective tax rate (ETR) with institutional

ownership as a moderating variable. This research uses

secondary data in the form of financial reports that have been

audited by auditors, where the data was obtained from the

official website of the Indonesia Stock Exchange (IDX) at

idx.co.id. The sampling technique used in this research is the

purposive sampling method. The population in this research

is property and real estate companies listed on the Indonesia

Stock Exchange (IDX) in 2019-2021, totaling 9 companies.

The sample used in this research was 41 companies with 123

observation data, taken based on certain criteria. This

research is quantitative research with secondary data sources

including the company's annual financial reports obtained

through the website www.idx.co.id and the official website

of each company. The method used to analyze the influence

of independent variables on the dependent variable in this

research is multiple linear regression analysis using SPSS

26. The results of the research show that Return on Assets

and Inventory Turnover (ITO) have a positive and

significant effect on the Effective Tax Rate, while Capital

Intensity has a negative effect. However, it is not significant

to the Effective Tax Rate for property and real estate sector

companies listed on the Indonesia Stock Exchange (IDX) in

2019-2023. Institutional ownership can moderate the

influence of Capital Intensity, Return on Assets, and

Inventory Turnover (ITO) on the Effective Tax Rate in

property and real estate sector companies listed on the

Indonesia Stock Exchange (IDX).

Nur Azizah Mariani

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4666

Introduction

One way to achieve the independence of a nation or state in terms of development

financing is to explore sources of funds from within the country, namely through taxes.

Taxes have an important role as one of the country's largest sources of revenue, so the

government pays special attention to this sector. In Indonesia, the government is making

intensification and extensification efforts to optimize the tax sector. Based on this, the

amount of tax revenue can affect the size of the State Budget. (Setiawan & Al-Ahsan,

2018).

Tax payment is a manifestation of state obligations and taxpayers' participation in

carrying out tax obligations to finance the state and national development. By the

philosophy of tax law, paying taxes is not only an obligation but also the right of every

citizen to participate in state financing and national development and provide direct

benefits for taxpayers. (Ardyansah & Zulaikha, 2014). Companies as taxpayers will try

to maximize profits through various expense efficiencies, including tax burdens. To

increase the efficiency of the tax burden, many companies carry out tax avoidance. To

encourage companies to be more active, the government provides incentives in the form

of reducing domestic corporate tax rates. (Angelina & Atiningsih, 2021).

In today's unpredictable economic conditions, property developers need to prepare

for more than just "money"; They must also have competitive "weapons" to win the

competition. Many property development companies have managed to excel in the

competition because they have a good master plan. (Chytia & Pradana, 2021). A master

plan is an overarching development framework that includes infrastructure in a region.

With a master plan, property developers can respond to customer needs faster and more

flexibly in the face of market changes and economic conditions. (Mustika et al., 2017).

For property business people, income tax is considered to have an impact on the

company's profit because the tax reduces the amount of profit earned, thus encouraging

property business people to carry out tax planning.

(Putri & Lautania, 2016) Stated that tax planning includes an effective tax rate

(ETR), which refers to the tax liability that must be paid, as well as the return on assets

(ROA). Based on the report of the Directorate General of Taxes, this phenomenon caused

the realization of state revenue in 2020 to decrease compared to 2019 but increased again

in 2021. The tax revenue target in 2019 of Rp 1,577.56 trillion was realized at Rp 1,332.06

trillion. In 2020, the tax revenue target is IDR 1,198.82 trillion with a realization of IDR

1,069.98 trillion. The decline in state revenue in 2020 was caused by a decline in national

economic activity due to the COVID-19 pandemic, so taxpayers were unable to make

payments as expected. (Ghozali, 2018).

Rules regarding health protocols have prevented Account Representatives from

conducting field visits directly, which has an impact on the quality of data obtained from

confirmation of taxpayer data. Taxpayers tend to prioritize efforts to maintain their

business over tax obligations. The problem is that many companies seek to reduce their

tax liabilities, which results in discrepancies in the calculation of the tax burden applied

by the rates set out in the law and reported in the company's financial statements. The

Analysis of the Influence of Capital Intensity, Inventory Turnover (ITO) and Return on Assets

(ROA) on the Effective Tax Rate (Etr) with Institutional Ownership as a Moderating Variable

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4667

Effective Tax Rate is a tax rate used by taxpayers to calculate the amount of tax that must

be paid by comparing the tax burden with commercial profit before tax (Rizal & Sari,

2022).

Capital intensity is the ratio of investment activities carried out by companies that

are linked to investments in the form of fixed assets. The ratio of capital intensity can be

used to show the level of efficiency of a company in using its assets to generate sales

(Chytia & Pradana, 2021).

1. How does capital intensity affect the effective tax rate (ETR) on companies in the

property and real estate sectors?

2. How does Inventory Turnover (ITO) affect the effective tax rate (ETR) on companies

in the property and real estate sectors?

3. How does return on assets (ROA) affect the effective tax rate (ETR) on companies in

the property and real estate sectors?

4. How does institutional ownership affect the effective tax rate (ETR) on companies in

the property and real estate sectors?

5. How does capital intensity affect institutional ownership as a moderation variable on

the effective tax rate (ETR) in companies in the property and real estate sectors

6. How does Inventory Turnover (ITO) affect institutional ownership as a moderation

variable on the effective tax rate (ETR) in property and real estate sector companies?

7. How does return on assets (ROA) affect institutional ownership as a moderation

variable on the effective tax rate (ETR) in property and real estate sector companies?

Several previous studies have tried to test the effect of capital intensity on the

effective tax rate (ETR). However, the results of the study are still inconsistent. The

research has been conducted. (Sanyora & Safitri, 2023) Where the results show that

capital intensity has a significant effect on the effective tax rate (ETR). Meanwhile, the

research conducted (Putri & Lautania, 2016) Where the results showed that capital

intensity did not affect the effective tax rate (ETR).

The Capital Intensity Ratio is often associated with the size of the company's fixed

assets and inventory. (Yunika et al., 2017) Mentioned that fixed assets allow companies

to deduct taxes due to depreciation every year so that companies with high fixed assets

have a lower tax burden compared to companies with low fixed assets. Liu and Cao

(2007) added that the asset depreciation method is driven by tax law, which allows

depreciation costs to be deducted from pre-tax profits, so that the larger the proportion of

fixed assets and depreciation costs, the lower the effective tax rate (ETR) of the company.

Furthermore, (Yunika et al., 2017) Explained that companies with high fixed assets tend

to do tax planning, so they have a low ETR. Based on this description, the hypothesis

formulated is that the Capital Intensity Ratio hurts the Effective Tax Rate (ETR).

Method

Nur Azizah Mariani

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4668

Classical Assumption Test

The Classic Assumption Test is used to evaluate the regression test design and to

confirm the existence of significant relationships before data analysis is performed. The

results of data processing through a series of testing stages aim to ensure that the model

is suitable and can be incorporated into several research sources (Chandrarin, 2017).

Some of the classic assumption tests include the Normality Test, the Multicollinearity

Test, the Autocorrelation Test, and the Heteroscedasticity Test.

Regression Analysis

A statistical model used to test causal relationships (influence and impact) with

variables with more than one independent variable (Kuantitatif, 2016).

The equation:

Y = α + β

+ β

+ ε

Information:

Y = effective tax rate (ETR)

a = Constanta

β1- β3

= Regression Coefficient

X1 = Capital Intensity

= Inventory Turnover (ITO)

X3 = Return on Asset (ROA)

ε = Error

Moderating Regression Analysis (MRA)

The purpose of moderated regression analysis is to test the magnitude of the

influence of each independent variable on the moderating variable.

Y = α + β1X1 + β2X2 + β3X3 + β4 (X1*Z) + + β5 (X2*Z) + β6 (X3*Z) + ε

Information:

Y = effective tax rate (ETR)

a = Constanta

β1- β3

= Regression Coefficient

X1 = Capital Intensity

= Inventory Turnover (ITO)

X3 = Return on Asset (ROA)

Z = Institutional Ownership

ε = Error

Results and Discussion

Normality Testing

This test is carried out to see if the residual variable shows a normal distribution

or not. This test can be seen from the following histogram image:

One-Sample Kolmogorov-Smirnov Test

Analysis of the Influence of Capital Intensity, Inventory Turnover (ITO) and Return on Assets

(ROA) on the Effective Tax Rate (Etr) with Institutional Ownership as a Moderating Variable

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4669

Unstandardize

d Residual

Normal Parametersa,b

Mean

.0000000

Std.

Deviation

.19594635

Most Extreme

Differences

Absolute

.075

Positive

.045

Negative

-.075

Test Statistic

.075

Asymp. Sig. (2-tailed)

.200c,d

From the table above, it can be seen that the significance level value of 0.200 is

greater than 0.05, so it can be concluded that the data has a normal distribution.

Multicollinearity Test Results

The results of the Multicollinearity test can be read in the table below:

If the Variance Inflation Floor (VIF) value is below 10, there is certainly no

multicollinearity. In the table above, it can be seen that the VIF values for CIR, ITO, and

ROA are 1.254 respectively; 1,1131; and 1,119; all of which are below 10 and there is

certainly no multicollinearity.

Heteroscedasticity Test Results

In the scatterplot image above, it can be seen that the distribution of the points is

almost even and no symptoms of heteroskedasticity occur. The research model is said to

experience symptoms of heteroscedasticity problems if there are variable variants in the

research model that are not the same.

Model Summary

Coefficients

Model

Collinearity Statistics

Tolerance

VIF

(Constant)

CIR

.797

1.254

ITO

.885

1.131

ROA

.893

1.119

a. Dependent Variable: ETR

Nur Azizah Mariani

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4670

Model

R Square

Adjusted R

Square

Std. Error of

the Estimate

Durbin-

Watson

.809

.655

.630

.14289

1.405

Based on the data of this study, namely the number of n as much as 45 and k as

much as 3, the value of the d table was obtained, namely dL = 1.3832 and dU = 1.6662.

Based on the Durbin-Watson test, it is known that the DW value in this study is 1.405.

The value lies among the provisions on.

The dU value < DW < 4-dU is 1.3832 < 1.405 < 2.3338, so it can be concluded that

there are no autocorrelation symptoms.

Hypothesis Test Results

To find out the influence of partial independent variables on the Effective Tax Rate

can be seen in the following table:

Coefficients

Model

Unstandardized

Coefficients

Standardize

Coefficients

Mr.

Std. Error

Beta

(Constan

-.060

.054

-1.129

.266

CIR

-.003

.333

-.001

-.008

.994

ITO

.235

.109

.210

2.153

.037

ROA

.267

.128

.270

2.093

.043

From the table, it can be seen that the influence of each independent variable on the

Effective Tax Rate, with the following explanation:

Hypothesis H1: The t-test results show a calculated t-value of -0.03, which is less

than the table's t-value of 2.018, with a significance level of 0.994 which is greater than

0.05. Therefore, H0 was rejected and Ha was accepted. The conclusion from this is that

the CIR variable has a negative but not significant effect on the Effective Tax Rate.

Hypothesis H2: The results of the t-test show a calculated t-value of 2.153, which

is greater than the table's t-value of 2.018, with a significance level of 0.037 which is less

than 0.05. So, H0 was rejected and Ha was accepted. Thus, it can be concluded that the

ITO variable has a positive and significant effect on the Effective Tax Rate.

Hypothesis H3: The results of the t-test show a calculated t-value of 2.093, which

is also greater than the table's t-value of 2.018, with a significance level of 0.043 which

is less than 0.05. So, H0 was rejected and Ha was accepted. The conclusion from this is

that the ROA variable has a positive and significant effect on the Effective Tax Rate.

Statistical Test Results

The following table shows the influence of the variables CIR, ITO, and ROA on

ETR together, with the following details :

ANOVA

Analysis of the Influence of Capital Intensity, Inventory Turnover (ITO) and Return on Assets

(ROA) on the Effective Tax Rate (Etr) with Institutional Ownership as a Moderating Variable

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4671

Model

Sum of

Squares

Mean

Square

Mr.

Regressi

1.069

.178

8.442

.000b

Residual

.802

.021

Total

1.870

It can be concluded that Return on Asset, Capital Intensity, and Inventory Turnover

together have a significant effect on the Effective Tax Rate.

Coefficient of Determination (R2)

The results of the determination test can be read in the following table:

Model Summary

Model

R Square

Adjusted R

Square

Std. Error of the

Estimate

.809

.655

.630

.14289

The value of the determination coefficient on the Adjusted R Square is 0.630. From

this value, it can be seen that the ability of independent variables to the dependent variable

of the Effective Tax Rate is 63%. The remaining 37% was explained by other variables

that were not studied other than return On Asset, Capital intensity, and Inventory

Turnover.

Moderating Regression Analysis (MRA)

Coefficients

Model

Unstandardized

Coefficients

Standardized

Coefficients

Sig.

Std. Error

Beta

(Constan

.027

.069

.385

.703

CIR

-.003

.333

-.001

-.008

.994

ITO

.235

.109

.210

2.153

.037

ROA

.267

.128

.270

2.093

.043

CIR*KI

.315

.122

.216

2.636

.033

ITO*KI

.473

.135

.483

3.504

.001

ROA*KI

.240

.193

.349

.3.429

.021

The interpretation of the results is as follows: The regression coefficients for the

variables Capital Intensity, Inventory Turnover, and ROA have been explained earlier.

The regression coefficient for the Capital Intensity variable moderated by institutional

ownership is 2.636 with a t-value of 0.33 (p = 0.000). These results show that institutional

ownership strengthens the influence of Capital Intensity on the Effective Tax Rate. The

regression coefficient for the Inventory Turnover variable moderated by institutional

ownership is 0.001 with a t-value of 3.504 (p = 0.001). This indicates that institutional

ownership strengthens the influence of Inventory Turnover on the Effective Tax Rate.

Meanwhile, the regression coefficient for the Return on Asset variable moderated by

Nur Azizah Mariani

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4672

institutional ownership is 3.429 with a t-value of 0.429 (p = 0.021). These results confirm

that institutional ownership strengthens the influence of Return on Assets on Effective

Tax Rate.

The results of this study show that there is an opposite relationship between capital

intensity and effective tax rate, where if capital intensity increases, the effective tax rate

will decrease and if capital intensity decreases, the effective tax rate will increase.

Although capital intensity has a negative relationship, it is not significant. This happens

because the company does not rely on assets to make decisions on the tax rates it pays. In

addition, assets that are considered capital by the company only affect the level of sales

and expenditure if there is a depreciation of goods related to the company's production

activities. The results of this study did not find any effect of the number of fixed assets

on the Effective Tax Rate. Companies that have large fixed assets are not used for tax

deductions because of depreciation costs attached to fixed assets, but to support the

company's operational activities (Rakhmati, 2019).

The results of this study are the statement according to Irvan and Henryanto

Wijaya (2015), which states that a low effective tax rate (ETR) describes a high level of

tax aggressiveness and vice versa. Then the results of this study are in line with the results

of research conducted by Danis and Zulaikha (2014) and Liu and Cao (2007), which

stated that the capital intensity ratio does not affect Tax Aggressiveness. The results of

the research by Mulyanti & Sundawa (2022) show the same result, namely capital

intensity does not affect the effective tax rate. The results of hypothesis testing in this

study show that there is no strong influence between the capital intensity ratio variable

and tax aggressiveness, this can be caused by various things. The insignificant

relationship between the company's capital intensity ratio and the level of tax

aggressiveness proxied to the effective tax rate (ETR) can be caused by the relatively

same capital intensity ratio in manufacturing companies.

The results of this study show that there is a relationship between Return On Asset

and effective tax rate, where if Return On Asset increases, the effective tax rate will

increase and if Return On Asset decreases, the effective tax rate will decrease. The

research is in line with the research of Thomas (2011) which examined the relationship

between Return On Assets and effective tax rates of companies. This research was

conducted on manufacturing companies listed on the Indonesia Stock Exchange. In a

study conducted by Janssen and William Buijink (2000) who researched companies in

the Netherlands, their findings stated that there was an effect of Return On Asset on

effective tax rates.

The results of the study show that capital intensity (CIR), return on assets (ROA)

and Inventory Turnover (ITO) can be moderated with Institutional Ownership because,

with institutional investors, shareholders can optimize the supervision of management

performance by monitoring every decision taken by the management as the company's

manager. Shleifer and Vishny (1986) (quoted from Khurana and Moser, 2009) state that

institutional investors play an important role in supervising, disciplining, and influencing

managers. Further, Shleifer and Vishny (1986) (quoted from Khurana and Moser, 2009)

Analysis of the Influence of Capital Intensity, Inventory Turnover (ITO) and Return on Assets

(ROA) on the Effective Tax Rate (Etr) with Institutional Ownership as a Moderating Variable

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 4673

argue that institutional investors, with large shareholdings and voting rights, can force

managers to focus on the company's performance and avoid opportunities to prioritize

their interests, institutional investors also have an incentive to ensure that the company

takes decisions that will maximize shareholder wealth. This research is in line with the

research conducted by Khurana and Moser (2009) which found that companies with a

larger level of institutional ownership will be more tax-aggressive. The more tax-

aggressive the company, the lower the effective tax rate results show that Capital Intensity

(CIR), Return on Asset (ROA), and Inventory Turnover (ITO) can be moderated by

Institutional Ownership. With institutional investors, shareholders can optimize

the supervision of management performance by monitoring every decision taken by the

company's management. According to Shleifer and Vishny (1986) quoted from Khurana

and Moser (2009), institutional investors have an important role in supervising,

disciplining, and influencing managers.

They argue that with large shareholdings and voting rights, institutional investors

can force managers to focus on the company's performance and avoid personal conflicts

of interest. In addition, institutional investors have incentives to ensure that the decisions

taken by the company will optimize shareholder wealth. This research is in line with the

results of research by Khurana and Moser (2009), which found that companies with

higher levels of institutional ownership tend to be more aggressive in tax management.

Companies that are more aggressive in tax management tend to have a lower Effective

Tax Rate (ETR).

Conclusion

Based on the results of the analysis and discussion that have been described, it can

be concluded that there is a negative and insignificant influence of Capital Intensity (CIR)

on the Effective Tax Rate (ETR) partially in property and real estate sector companies

listed on the Indonesia Stock Exchange for the 2019-2023 period. In addition, there is a

positive and significant influence of Inventory Turnover (ITO) and Return on Asset

(ROA) on the Effective Tax Rate (ETR) partially in the same company and the same

period. The variables Capital Intensity (CIR), Return on Asset (ROA), and Inventory

Turnover (ITO) can also be moderated by institutional ownership of the Effective Tax

Rate (ETR) in property and real estate sector companies listed on the Indonesia Stock

Exchange for the 2019-2023 period. Therefore, it is possible to analyze the Effective Tax

Rate (ETR) using a comparison of other variables or ratios. This research was conducted

for five years, and it is hoped that further research can extend the research period and

involve companies from other sectors, such as manufacturing companies, to obtain more

accurate results regarding the effect of financial ratios on the Effective Tax Rate (ETR)

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