Abstract:

This study aims to examine the nature of tax disputes and the characteristics of companies experiencing tax disputes. An emerging country i.e. Indonesia is chosen as the case study due to its uniqueness in regards to tax reform programs. Sample of the study is public listed companies in 2015, period of the latest tax amnesty program was enacted. This study shows that firstly majority of listed companies in Indonesia, specifically companies in Trade, Service and Investment Sector, experiencing tax disputes; secondly, tax income is the type of tax being mostly disputed; and 2012 is the fiscal period that tax disputes mostly occurred. This study also found that tax management strategy taken by most noncompliant companies are accepting the decision mentioned in Tax Assessment Notice; the companies did not take any further law actions such as tax objection or tax appeal. This study also presents specific characteristics of tax dispute companies which are related to firm age, external auditors, firm size, company’s liquidity and profitability, and foreign ownership. This research extends tax literature by providing new insight in examining non-compliance of taxpayers and new proxy for tax incompliance. The research provides practical contribution to tax authority to develop better tax assessment strategy.