THE ROLE OF TAXES IN FAMILY FIRM INVESTMENT ANDFINANCING DECISIONS

Abstract

This study aims to analyze the role of tax in influencing investment and financing decisions in family businesses. Tax is an important component in the business environment that is often the main consideration in making strategic decisions. Using a qualitative approach with a case study method,
this study involved five family businesses engaged in the food, distribution, and service sectors in Medan City. Data were collected through in-depth interviews and internal company documentation, then analyzed thematically. The results of the study indicate that most family businesses prefer internal funding to external funding due to tax considerations and the desire to maintain control of the business. However, low tax literacy results in minimal effective fiscal planning, so that investment decisions are
often fiscal and suboptimal. In addition, the level of utilization of tax incentives is still low due to procedures that are considered complex and lack of socialization from the tax authorities. This study recommends the need to improve tax education, support fiscal consultation, and simplify access to tax incentives so that family businesses can be more adaptive in developing investment and financing strategies sustainably.