Fiscal Loss Compensation and Deferred Tax Expense in Tax Avoidance Practices: The Role of Inflation as a Control Variable

Abstract

Tax avoidance practices have become a concern in corporate tax management because they may involve efforts to reduce tax liabilities through tax provisions and differences between accounting profit and taxable profit. Previous studies have reported inconsistent findings regarding fiscal loss compensation, deferred tax expense, and tax avoidance, particularly in the property and real estate sector. This study aims to analyse the effects of fiscal loss compensation and deferred tax expense on tax avoidance, with inflation as a control variable, among property and real estate companies listed on the Indonesia Stock Exchange during 2020–2024. The population consisted of 92 companies, with 8 companies meeting the purposive sampling criteria, resulting in 40 observations. A quantitative approach with an associative research design was employed using secondary data from annual financial statements. Data were analysed using panel data regression with EViews through the Common Effect Model, Fixed Effect Model, and Random Effect Model, supported by the Chow, Hausman, and Lagrange Multiplier tests. The results show that fiscal loss compensation has no significant effect on tax avoidance. Deferred tax expense has a positive and significant effect on tax avoidance, while inflation has no significant effect. Simultaneously, fiscal loss compensation, deferred tax expense, and inflation have a significant effect on tax avoidance. These findings provide empirical evidence regarding accounting and taxation factors associated with tax avoidance and offer considerations for management, investors, and regulators in understanding corporate tax information.