Impact of Profitability on Tax Avoidance in the Pharmaceuticals and Chemicals Sector Companies of Bangladesh: Evidence from DSE
The purpose of this study is to investigate the impact of profitability on tax avoidance in the listed pharmaceuticals & chemicals sector companies of Bangladesh. The study has used current effective tax rate as the proxy for corporate tax avoidance, and return on assets as the proxy for profitability of the sample firms. Using purposive sampling method, 5 (five) listed companies of pharmaceuticals & chemicals sector on Dhaka Stock Exchange Limited (DSE) have been selected as the sample. Data have been collected from the annual reports of the sample firms over a period of 3 (three) years from 2016-17 to 2018-19 to make the empirical analyses. The result of multiple regression analysis on the collected firm-year observations has been shown that profitability has positive impact on tax avoidance of the sample firms. However, this positive impact of profitability on corporate tax avoidance is not statistically significant. The findings of the study would provide a valuable insight along with empirical evidence for the policy makers in addressing the issue of corporate tax avoidance among the listed companies of Bangladesh.