THE EFFECT OF FINANCIAL DERIVATIVES AND THIN CAPITALIZATION ON TAX AVOIDANCE PRACTICES

Amirah ‘Aliyah Al Ya’qubi (Muhammadiyah University of Gresik, Indonesia)
Nyimas Wardatul Afiqoh (Muhammadiyah University of Gresik, Indonesia)

Proceeding of International Conference on Social Science and Humanity
Vol. 3 No. 3 (2026): Proceeding of International Conference on Social Science and Humanity

Objective: This study aims to examine the effect of financial derivatives and thin capitalization on tax avoidance in companies listed on the Indonesia Stock Exchange. Method: The study used a quantitative approach with secondary data from annual financial reports and generated 60 companies through purposive sampling. The analysis was conducted using multiple linear regression. Results: The results show that financial derivatives have no significant effect on tax avoidance, while thin capitalization has a significant positive effect on tax avoidance. Simultaneously, both variables influence tax avoidance. Novelty: These findings suggest that capital structure, particularly the use of debt, is an important factor in corporate tax avoidance practices.