Determinants of aggressive corporate tax planning

Corporate tax plays a crucial role in attaining an economy’s fiscal goals and stimulating economic growth. The context of the corporate world is rapidly expanding. As a result, it has an impact on how accounting is practiced. The role of managers is evolving away from planning the business operation toward implementing strategies in tax reporting to lower their tax burden. Since the aggressive corporate tax planning will harm the Malaysian economy, it has drawn much attention from the tax authorities, stakeholders and the public. Thus, ensuring the integrity of the financial reporting process and providing quality information to calculate tax liability is vital. Notwithstanding, from the agency theory perspective, the managers will deviate from their role to act in the best interest of the shareholders. As a result, several factors will affect managers’ decisions in conducting effective corporate tax planning. Hence, this study’s main aim is to discuss the determinants influencing corporate tax planning. Since tax liability represents the cost of operating a business and, thus, a significant impediment to maximizing wealth, effective tax planning is essential for companies. Nevertheless, companies need to ensure that their action in corporate tax planning abides by the law to avoid any penalties imposed by the tax authorities.