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All Journal Riset Akuntansi dan Keuangan Indonesia
Eta Fasita
Politeknik Keuangan Negara STAN
Economics, Econometrics & Finance

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Transfer Pricing Aggressiveness, Thin Capitalization, Political Connection, Tax Avoidance: Does Corporate Governance Have A Role in Indonesia? Eta Fasita; Amrie Firmansyah; Ferry Irawan
Riset Akuntansi dan Keuangan Indonesia Vol 7, No 1 (2022): Riset Akuntansi dan Keuangan Indonesia
Publisher : Universitas Muhammadiyah Surakarta

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.23917/reaksi.v7i1.17313

Abstract

This study investigates the association of transfer pricing aggressiveness, thin capitalization, and political connection with tax avoidance and the corporate governance's role in moderating these associations. The secondary data of this study are data and information obtained from financial reports and annual reports sourced from www.idx.co.id and www.idnfinancials.com. The analysis is conducted on 61 non-financial multinational companies listed on Indonesia Stock Exchange over the 2016-2019 period, chosen by the purposive sampling method resulting in 244 firm-year. Hypothesis testing employs regression analysis with a data panel.  The result suggests that transfer pricing aggressiveness and political connection are negatively associated with tax avoidance. In contrast, thin capitalization is positively associated with tax avoidance. However, corporate governance can weaken each of these associations. This study indicates that the Indonesian Tax Authority should consider multinational companies with large interest debt structures on the list of priorities in tax inspection policy. Also, this study shows Indonesian firms are less likely to use political connection and transfer pricing to avoid tax.
Co-Authors Amrie Firmansyah Deddy Sismanyudi Ferry Irawan Pramuji Handar Jadi Riandi Satria Soekarno Wahyudi Febrian