This study aims to investigate the impact of board of directors’ characteristics (meetings frequency, independence and size) on corporate Islamic tax (zakat) avoidance.
Using a sample of 107 non-financial Saudi Arabian firms over the period 2009–2019 and using various econometric techniques, this study first aimed to assess the direct impact of board characteristics on Islamic corporate tax avoidance. Subsequently, the authors examined the behavior of boardrooms regarding different levels of zakat avoidance by applying the panel quantile regression method.
The results indicate that board meeting frequency, independence and size significantly influence the effective zakat rate (EZR). Specifically, board meeting frequency and board size have a negative impact on the EZR, while board independence exhibits a positive effect. Moreover, the impact of board characteristics is significant and effective only at the highest quantile (90%) of the EZR.
The findings of this study suggest that, despite Saudi Arabia’s reliance on an Islamic tax collection model, firms exhibit varying levels of zakat management. This indicates that certain advisory characteristics may effectively mitigate the management of Islamic tax.
