Transfer Pricing and Thin Capitalization’s Impacts Towards Tax Avoidance: Corporate Governance Moderation

Gracesilia Sheilora Manik, Vita Elisa Fitriana

Abstract


The sort of manufacturing company that contributes the most to taxes could continue to be involved in tax avoidance. The issue of tax avoidance is still being hotly debated, even in the G20 Movement, which was recently implemented in Indonesia. This study uses quantitative research and secondary data analysis. There are four variables used in this research. Transfer pricing and thin capitalization are used as two independent variables because they are critical elements that are frequently used in tax avoidance strategies. Tax avoidance is the dependent variable, and corporate governance is the moderating variable. Corporate governance is a component that can reduce the impact of tax avoidance through internal business rules. In this research, the hypotheses are analyzed using a multiple linear regression model, and the classic assumption test is used to determine whether the data received is normal and suitable for testing. In this research, manufacturing firms that were listed on the Indonesia Stock Exchange (IDX) between 2019 and 2021 are used as a sample. The findings of this research showed that transfer pricing and thin capitalization have no impact on tax avoidance and corporate governance as a moderating variable cannot reduce the influence of tax avoidance.

Keywords: transfer pricing, thin capitalization, corporate governance, tax avoidance


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