TAX PLANNING, AGGRESSIVENESS, AND CORPORATE FINANCIAL PERFORMANCE

This study examines the complex relationship between tax planning, tax aggressiveness, and corporate financial performance among listed firms. The research addresses a fundamental tension in corporate finance: while tax planning can enhance after-tax profitability, aggressive tax strategies may impose significant costs through reputational damage, regulatory scrutiny, and operational disruptions. Through a comprehensive review of recent empirical literature from 2020 to 2025, this work analyzes how firms navigate the trade-off between tax minimization and sustainable value creation. The findings reveal that tax planning exhibits a modest but positive impact on financial performance, though this effect is contingent upon firm characteristics including age, leverage, and industry context. Importantly, the relationship is non-linear—moderate tax planning enhances performance, while aggressive tax avoidance yields diminishing returns and may ultimately destroy shareholder value. The study contributes to both academic literature and managerial practice by providing a nuanced framework for understanding when and how tax strategies contribute to long-term corporate success. Key recommendations emphasize the importance of balanced approaches that integrate tax planning with broader corporate governance and stakeholder considerations.

Keywords: Tax Planning, Tax Aggressiveness, Corporate Financial Performance, Effective Tax Rate, Firm Value