COOPERATIVE TAX AVOIDANCE: EVIDENCE OF IMPLEMENTATION OF AGENCY THEORY

Abstract

This research aims to analyze the application of Agency Theory in cooperative business organizations, specifically focusing on the relationship between owners (members) and management, as well as the relationship between management and the tax authorities. The management is obligated to enhance the well-being of members by raising the residual business outcomes, namely profitability. Internally, this may be achieved via enhancing cost efficiency, optimizing capital use, and leveraging debt. Externally, management might use legal strategies to minimize tax obligations. The research was structured using a quantitative methodology, specifically utilizing panel data. The study was conducted from 2015 to 2019, utilizing purposive selection to choose a sample of 100 enterprises located in the eastern region of western Java. Path analysis was used as the research methodology. The findings of this research suggest that cooperative management aims to enhance profitability and achieve tax savings in a lawful manner, in order to fulfill the members' expectations of improving their well-being. Additionally, the management remains committed to fulfilling its tax payment commitments.