THE INFLUENCE OF AGGRESSIVE FINANCIAL REPORTING OF THE COMPANY TOWARD AGGRESSIVE TAX REPORTING IN AGRICULTURAL COMPANIES

Received: October 27, 2018; Revised: May 18, 2019; Accepted: June 19, 2019 Abstract  This study aims to determine the influence of aggressive financial reporting, ROA, DAR, and Size OF The Company toward Aggressive Tax Reporting (ATR) in agricultural companies listed in Daftar Efek Syariah (DES) during period 2013-2016. The sampling method is purposive sampling. The data analyzed using multiple regression for dated panel with significance level 5% (0,05). The choosing model test showed that model used in this study is the Fixed Effect Model (FEM). Simultaneously all independent variables from model had significant influence toward dependent variable (ATR). Partially aggressive financial reporting, ROA, and DAR that had significance influence toward ETR, while variable size had unsignificant influence. The research also showed that there is trade off between aggressive financial reporting and aggressive tax reporting.


INTRODUCTION
In order to prevent the company from committing tax evasion takes proper management to manage and suppress the tax expense as low as possible. Darmadi and Zulaikha (2013) stated tax management is meant to fulfill tax obligation properly, but at the same time also suppress tax expense as low as possible to earn profit and liquidity that management desired. Tax management must be done well so as not to violate tax regulation.
The company can also make use the gaps that appear between regulations, this action often called as aggressive tax reporting. Zuber and Sanders (2013) positions tax aggressive as a potential that appears in the gray area between tax avoidance and tax evasion. Frank, Lynch, and Rego (2009) stated that tax aggressive is an action which is intended to lower taxable income trough tax planning, either classified as a tax evasion or not. Chen (2010) concludes that tax aggressive appears because there is a conflict of interest between company as a taxpayer and the government as a tax collector. The government collects tax to finance its activities, while the company takes tax as an expense. Tax expense will reduce net income so it is suspected the company prefers doing aggressive tax reporting.
On the other hand, tax aggressive also has bad influence for the company because it forces management to suppress the profit even lower. The company reputation can be ruined in the eye of stakeholder, such as creditor and investor. To get a long term debt and capital injection, the company tends to show higher profit. This action often called aggressive financial reporting (earning management) (Kamila, 2014).
Moreover, Frank, Lynch, and Rego (2009) defines aggressive financial reporting as an activity to increase profit through earning management either according to accounting principle or not.
The motivation behind tax management and earning management is almost the same.
Tax management related to the earning management because to attain it, the manager need to control the profit as low as possible.
On the other hand, when manager needs to Mulyaning Wulan 170 increase/decrease the profit, it is needed to control tax as one of the biggest and regular expense (Kamila, 2014).
The thing above showed the possibility of trade off between aggressive tax reporting and aggressive financial reporting or often called as book-tax trade-off (Shackleford & Shevlin, 2001 (Frank, Lynch, & Rego, 2004).
An Increase in book-tax difference allows discrepancy between accounting principle and tax regulation, in result the company has the chance through the existed gapto suppress the tax expense and increase profit at the same time (Frank, Lynch, & Rego, 2009).
Debt On Asset is a ratio that measure how many of assets financed by debt. If the company has large debt, the interest will decrease the earnings before tax, so the tax expense will be smaller. The company can use the leverage as a way to minimize the earning before tax so the tax expense will become lower (Adisamartha & Noviari, 2015).
Return On Asset is a ratio that measure the ability of a company to make profit from its asset. ROA is one of the factors that can affect the tax expense. A company with high profitability will pay larger tax, on the other hand company with low profitability will pay smaller tax. Company with low profitability more likely do tax aggressive and maintain the profit high, so it can pleased the stakeholder (Adisamartha & Noviari, 2015).
The Size of the company can measure the large/small asset owned by the company.
The bigger the asset is expected to increase the productivity of the company. Increased in productivity will also increase the profit and most likely will affect with tax expense should be paid by the company (Adisamartha & Noviari, 2015). Indonesian government will be categorized as a principal, while the taxpayer will be categorized as an agent (Ayu, 2008).
The government as principal task the taxpayer as an agent to paid certain amount of taxes in order to govern the country, such as for APBN to develop the economy. But, in the profit companies eyes as one of the biggest taxpayer, tax is categorized as an expense and should be pressed as minimum as possible. This is showed the conflict of interest between principle and agent in taxation term (Ayu, 2008).
Moreover, since tax reformation in 1983, Indonesian government changed the collecting tax system, from official assessment into self assessment. Self assessment means the taxpayer will calculate, paid, and report its tax expense itself. The government will only controlled the process by assessing if the taxpayer do it in accordance with the law or not (Gunawan & Hidayat, 2005). This system, if not control and conduct properly, will lead to asymmetrical information problems.
The taxpayer represent by the director knows more about the condition of the company than the government. So, in order to minimize its tax expense the director will conduct several policy/action, either categorized as legal or illegal, using the information that the government know less about and try to gain some benefit. This action is called aggressive tax reporting (Hite & McGill, 1992).

Aggressive Tax Reporting
Tax aggressive is an action or policy set by management to reduce the tax expense.
According to Frank, Lynch, and Rego (2009) tax aggressive is an action aimed to lowering the taxable income through tax avidance, either using ways that is classified as tax evasions or not. Hite and McGill(1992) also

Return On Asset (ROA)
Return on Asset (ROA) is a ratio used to assess the company's ability to utilize its assets to earn profits. This ratio measures the return of investment rate based on the company's asset. Profit used is are profit before tax and interest, it is to see how big the profit generated by the company before the deductible expenses (Prastowo, 2014).

Return On Asset (ROA)
Return on Asset (ROA) is a ratio used to assess the company's ability to utilize its assets to earn profits. This ratio measures the return of investment rate based on the company's asset. Profit used is are profit before tax and interest, it is to see how big the profit generated by the company before the deductible expenses (Prastowo, 2014).

Debt On Asset (DAR)
Debt to Asset (DAR) is a ratio used to measure how much the company's assets are financed by debt or how much debt affects the management of assets. The higher the ratio of DAR indicates that debt of the company is high and will make it difficult for companies to obtain additional borrowed funds. Conversely, if the rate is lower the company is not mainly financed with debt (Kasmir, 2014).
The size of the DAR can influence with the size of tax expense. This is because the interest from debt can become a deductible in the calculation of tax, so the tax expense will decrease. So the higher the interest of debt will make the ETR score smaller (Lanis & Richardson, 2012).
On the other hand, the Debt covenant theory stated that when the company asset consist mainly from debt, the company will not do tax aggressive. It is because the company will try to maintain a good relationship with the creditor, and keep the profit high, so the tax expense will be large too (Adisamartha & Noviari, 2015).

Size of The Company
The size of the company measured by total assets will be calculated using the natural logarithm ln (n). This is because if total assets written directly, there will be excessive fluctuations in the data, thus simplified using natural logarithm (Ghozali I., 2006).
The Political Power Theory stated that big company can utilized its potential to manipulate its tax expense through political process, but on the other hand there is also Political Cost Theory stated that big company can not aggressive in taxation in order to avoid any political attention (Watts & Zimmerman, 1990).

METHOD
This method of research is associative which aims to see the influence of variable independent towards variable dependent. (Sugiyono, 2009). This thesis aim to analyze

Companies enganged in Agricultural
Industries listed in Daftar Efek Syariah The data showed that at least 10 companies in research sample do tax aggressive in the level of 5% to 11% below the statutory tax rate yearly. While the rest of the samples, doing tax aggressive in the level 1% to 4% below the statutory tax rate of 25%, yearly.

Statistic Description Analysis
The following

Normality Test
The following table is the normality test result: Mulyaning Wulan 179

Heteroskedasticity Test
The following table is the heteroskedasticity test result:

Autocorrelation Test
The following table is the autocorrelation test result:  showed that the influence is negative, means that when the manager doing earning management in order to increase its profit, the company must bear with the risk to paid higher tax expense.
It is also needed to take note that the research sample had a trend to decrease its profit as shown in the chart below: Source: data processed by researcher (2018) The chart above showed the trend of government as one of the representatives in earning management done by sample international market. The government also companies. The majority of the data showed seen as it as a big potential source for income negative numbers, mean that majority of the tax.
sample companies decrease its profit. This is Companies seen tax expense as an probably caused by the condition of the expenditure that need to minimize, so the agricultural industry in Indonesia. For the manager in sample companies probably last five years agricultural industries showed decreases its profit in order to avoid paying progressive growth and positioned by the higher tax. It is shown that there is a conflict of interest happened, where principle or government do its right by collecting taxes, the agent or companies avoid it by decreasing its profit, so the tax expense will be lower.
This result supported by the research of Erickson, Hanlon, and Maydew (2004), Hanna and Haryanto (2016), and Waharini show good performance to the stakeholder.
When the company practice tax aggressive the net profit will be bigger, it will also make the score of ROA higher. ROA is one of the main ratio oftenly used by the stake holder to evaluate the condition of the company. So, if the score of ROA high it will benefit the company. On the other hand company with high profitability will have less tendency to do tax aggressive. It is because the high profit Mulyaning Wulan 184 will show in the financial report, and it will strike suspicion if the tax expense is low.
Rodriguez and Arias (2012) also stated that ROA have direct influence towards ETR. If the ROA is the company will try to increase it by doing tax aggressive. The saving from minimize tax expense will be used to add the net profit and make the ROA bigger. It is relevan with the data, because the sample companies averagely only able to raise profit 8% from its asset. Source: data processed by researcher (2018) The chart above explain that 5 from 8 also showed that the Debt on Asset ratio is sample companies showed that it only able to really high. If majority of asset fund by debt produce around 1% to 10% return from its automatically the majority of asset will be asset turn over. It is really low and indicated used to paid debt too.
that there is around 80% return that can not This result supported by the research of be acquired as profit for the company. It is Kamila (2014) and Ardyansyah (2014).
also contradict the purpose of the companies Those research also stated that ROA had to make profit. significant positive influence towards ATR.
The low score of ROA may indicated The savings from doing tax aggressive will that the return from asset is allocated in be used to increase the net profit, so the ROA another post, such as to paid debt as the data will be higher. Higher ROA will attract stakeholder and showed that the companies towards ETR. The chart above showed that around 5 from 8 sample companies had ration Debt On Asset (DAR) between 40% to 70%. It means that more than half of its assets financed by debt, and will potentially make the companies dependent of the debtor and will do anything to fulfill their wish. The company may can not stand on their own when manage their operation.
It is also indicated that the output from turnover of its asset will be used to pay its debt rather than to acquire it as a profit. This is also indicated bad management as the of sole purpose of a company is to make profit.
This result supported by the research of Adisamartha and Noviari (2015), and Waharini and Annisa (2017 Source: data processed by researcher (2018) The  (2007) who found that size had significant negative influence towards ATR.
They stated that the positive influence means that big company will be more precise and careful when reporting its activities, the manager will not have less opportunity in manipulate tax expense than the manager in small company. This result is different is also probably because the amount of the sample