The Effect Of Transfer Pricing And Political Connections On Tax Avoidance With Profitability As A Moderating Variable
DOI:
https://doi.org/10.59188/eduvest.v4i8.1801Keywords:
Tax Avoidance, Transfer Pricing, Political Connections, ProfitabilityAbstract
Tax avoidance is an effort taken to reduce tax liabilities and maximize after-tax income that is carried out legally and safely for taxpayers because it does not conflict with tax provisions. The purpose of this study is to analyze the effect of transfer pricing, political connections, on tax avoidance with profitability as a moderating variable in multinational companies in the manufacturing sector listed on the Indonesia Stock Exchange in 2018-2022. The data obtained in this study come from the annual reports of multinational companies in the manufacturing sector listed on the Indonesia Stock Exchange in 2018-2022. The data analysis technique used in this study was purposive sampling and obtained 66 companies with a research period of 5 years, namely 2018-2022 so that 330 samples were obtained. The analysis method used in this research is multiple linear regression analysis and MRA. The results of this study indicate that the transfer pricing variable has a negative effect on tax avoidance but the transfer pricing variable has a positive effect on tax avoidance with moderating profitability, while political connections have no effect on tax avoidance even with moderating profitability.
References
Annisa. (2017). The Effect of Return On Assets, Leverage, Firm Size, and Political Connections on The Extent of Tax Avoidance. JOM Fekon, 4(1), 685-698. www.neliti.com
Apsari, A. A. N. C., & Supadmi, N. L. (2018). The Effect of Executive Compensation, Political Connections, and Capital Intensity on Tax Avoidance. E-Journal of Accounting, 25, 1481. https://doi.org/10.24843/eja.2018.v25.i02.p25
Arianandini, P. W., & Ramantha, I. W. (2021). The Effect of Profitability, Leverage, and Institutional Ownership on Tax Avoidance. Dynamics of Financial Accounting and Banking, 10(1), 51-61. https://doi.org/10.35315/dakp.v10i1.8541
Financial and Development Supervision Agency. (2022). Transfer Pricing is Not the Cilincing Plowman. Advis. https://advis.id/public/storage/analytic/a452a672a87e44136c28b15b75e7009bf1610995.pdf
Barker, J., Asare, K., & Brickman, S. (2016). Transfer Pricing As A Vehicle In Corporate Tax Avoidance. The Journal of Applied Business Research, 33(1), 9-15. https://doi.org/10.19030/jabr.v33i1.9863
Christy, L., Julianetta, V., Excel, A., Tantya, F., Kristiana, S., & Salsalina, I. (2022). The Effect of Transfer Pricing and Profitability on Tax Avoidance of Mining Sector Public Companies in Indonesia. Journal of Accounting, Management, Business and Technology (AMBITEK), 2(1), 59-69. https://doi.org/10.56870/ambitek.v2i1.37
Dewinta, I., & Setiawan, P. (2016). The Effect of Company Size, Company Age, Profitability, Leverage, and Sales Growth on Tax Avoidance. E-Journal of Accounting, Udayana University, 14(3), 1584-1615.
Fajri, A. (2019). The Effect of Political Connections on Tax Avoidance (Case Study of Companies Listed on the Indonesia Stock Exchange 2016-2017). Scientific Journal of FEB Students, 1-18. https://repository.maranatha.edu/26999/
Ferdiawan, Y., & Firmansyah, A. (2017). The Effect of Political Connection, Foreign Activity, and Real Earnings Management on Tax Avoidance Tax Revenue is. 5(3), 1601-1624.
Fitiasari, Y., & Suwandi. (2020). The Role of Political Connections Strengthens the Relationship between Profitability and Tax Avoidance. Journal of Islamic Accounting and Tax, 3(28), 17-35.
Ghozali, I. (2016). Application of Multivariete Analysis with IBM SPSS 23 Program (8th ed.). UNDIP Publishing Agency.
Hartantio, A., & Trisnawati, E. (2021). The Effect of Capital Intensity and Political Connections on Tax Avoidance. Journal of Multiparadigm Accounting, III (2), 894-902.
Hendi, & Handianto. (2021). The effect of transfer pricing, earnings management and corporate social responsibility on tax avoidance. Journal Feb Unmul, 23(3), 570-581.
Hery. (2015). Financial Statement Analysis: Financial Ratio Approach. CAPS (Center for Academic Publishing Service).
Hijriani, A. N., Latifah, S. W., & Setyawan, S. (2014). The Effect of Political Connection, Board of Commissioners and Company Characteristics on Tax Avoidance. Journal of Accounting Review, 4(1), 525-534.
Himawan, A. (2017). Fitra: Every Year, Tax Avoidance Reaches Rp110 Trillion. Suara.Com. https://www.suara.com/bisnis/2017/11/30/190456/fitra-setiap-tahun-penghindaran-pajak-capai-rp110-triliun
Hutajulu, A., & Hutabarat, F. M. (2020). The Mediating Effect of Solvency in the Relationship Between Capital Structure and Return On Equity. Scientific Journal of Management, Business and Accounting Students (JIMMBA), 2 (4), 610-618. https://doi.org/10.32639/jimmba.v2i4.639
Imanuella, K., & Damayanti, T. W. (2022). Analysis of the Level of Political Connection to Tax Avoidance: Manufacturing Companies on the IDX 2015-2019. Journal of Accounting Theory & Applied Research (PETA), 7(1), 38-60. https://doi.org/10.51289/peta.v7i1.499
Irawan, F., Kinanti, A., & Suhendra, M. (2020). The Impact Of Transfer Pricing And Earning Management On Tax Avoidance. Talent Development & Excellence, 12(3), 3203-3216. www.investindonesia.go.id
Iriyadi, Meiryani, Darmawan, M. A., Warganegara, D. L., Purnomo, A., & Persada, S. F. (2024). The Effect of Sustainability Reporting, Transfer Pricing, and Deferred Tax Expense on Tax Avoidance in Multinational Manufacturing Sector Companies. Journal of Governance and Regulation, 13(1), 50-62. https://doi.org/10.22495/jgrv13i1art5
Kartiko, N. D. (2020). Tax Leakage and Shadow Economy in Illegal Logging Practices. In National Symposium on State Finance (Vol. 2, Issue 1, pp. 590-609).
Cashmere. (2016). Financial Report Analysis. Raja Grafindo Persada.
Kim, C., & Zhang, L. (2016). Corporate Political Connections and Tax Aggressiveness. Contemporary Accounting Research, 33(1), 78-114. https://doi.org/10.1111/1911-3846.12150
Kiswanto, N., & Purwaningsih, A. (2014). The Effect of Tax, Foreign Ownership, and Company Size on Transfer Pricing in Manufacturing Companies in Bei in 2010-2013. Journal of Accounting Economics, 1-15. https://e-journal.uajy.ac.id/6782/
Lutfia, A., & Pratomo, D. (2018). The Effect of Transfer Pricing, Institutional Ownership, and Independent Commissioners on Tax Avoidance (Study on Manufacturing Companies listed on the Indonesia Stock Exchange in 2012 - 2016). E-Proceeding of Management, 5(2), 2386-2394. www.pajak.go.id
Mariadi, M. D., & Dewi, L. G. K. (2022). The Effect of Leverage, Profitability, and Fixed Asset Intensity on Tax Avoidance in Manufacturing Companies on the IDX. JIMAT Ganesha University of Education, 13(4), 1136-1140.
Maulida, R. (2023). Profitability Ratios: Definition, Types, and Examples. Onlinepajak.Com. https://www.online-pajak.com/seputar-pajak/rasio-profitabilitas
Melisa, & Muslim, R. Y. (2021). The Effect of Transfer Pricing on Tax Avoidance. Journal of Accounting & Finance Education.
Muhajirin, M. Y., Junaid, A., Arif, M., & Pramukti, A. (2021). The Effect of Transfer Pricing on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange. Center of Economic Student Journal, 4(2), 1-19. https://jurnal.fe.umi.ac.id/index.php/CSEJ/article/view/423
Nurrahmi, A. D., & Rahayu, S. (2020). The Effect of Business Strategy, Transfer Pricing, and Political Connections on Tax Avoidance. JAE (Journal of Accounting and Economics), 5(2), 48-57. https://ojs.unpkediri.ac.id/index.php/akuntansi/article/view/14162
Nuswantara, D. A., Fachruzzaman, D. A., Prameswari, R. D., Suyanto, R. D., Rusdiyanto, R., & Hendrati, I. M. (2023). The Role of Political Connection to Moderate Board Size, Woman on Boards on Financial Distress. Cogent Business and Management, 10(1). https://doi.org/10.1080/23311975.2022.2156704
Panjaitan, J. Y., & Fitri, H. (2019). Development of Tax Revenue Realization for the Period 2013-2018 and Target in the 2019 Draft State Budget. Center for Budget Studies, House of Representatives Expertise Agency, 1-12. http://berkas.dpr.go.id/puskajianggaran/referensi-apbn/public-file/referensi-apbn-public-17
Pranoto, B. A., & Widagdo, A. K. (2016). The Effect of Political Connections and Corporate Governance on Tax Aggresiveness. Syariah Paper Accounting FEB UMS, 2012, 472-486.
Prastiwi, D., & Walidah, A. N. (2020). The effect of tax aggressiveness on firm value: The moderating effects of transparency and institutional ownership. Journal of Economics and Business, 23(2), 203-224. https://doi.org/10.24914/jeb.v23i2.2997
Puspita, D. A., & Putra, H. C. (2021). The Effect of Profitability and Corporate Social Responsibility Disclosure on Tax Aggressiveness. Journal of Administration and Business, 15(2), 71-81. http://j-adbis.polinema.ac.id/index.php/adbis/article/view/119
Puspita, D., & Febrianti, M. (2018). Factors that influence tax avoidance in manufacturing companies on the Indonesia stock exchange. Journal of Business and Accounting, 19(1), 38-46. https://doi.org/10.34208/jba.v19i1.63
Santoso, Y., & Priantinah, D. (2016). The Effect of Profitability, Company Size, Asset Structure, Liquidity, and Growth Opportunity on the Company's Capital Structure. Profita Journal, 4(3), 1-17. https://journal.student.uny.ac.id/ojs/index.php/profita/article/view/5636/5382
Sari, A. Y. (2021). The Effect of Profitability, Leverage, and Institutional Ownership on Tax Avoidance. 10(1), 51-61.
Sari, G. M. (2014). The Effect of Corporate Governance, Company Size, Fiscal Loss Compensation and Ownership Structure on Tax Avoidance. http://www.springer.com/series/15440%0Apapers://ae99785b-2213-416d-aa7e-3a12880cc9b9/Paper/p18311
Sugiyono. (2017). Quantitative, Qualitative, and R&D Research Methods. ALFABETA.
Sujarweni, V. W. (2014). Research Methodology: Complete, Practical, and Easy to Understand (1st ed.). New Library Press.
Sutomo, H., & Djaddang, S. (2017). Determinants of Tax Avoidance of Manufacturing Companies in Indonesia. Journal of Accounting & Taxation Research (JRAP), 4(01), 32-46. https://doi.org/10.35838/jrap.v4i01.148
Syadeli, M. (2021). The Effect of Corporate Governance, Fiscal Loss Compensation, and Company Size on Tax Avoidance. Journal of Social Sciences, 18(2), 535-544.
Tampubolon, K., & Farizi, Z. Al. (2018). Transfer Pricing & How to Make TP Doc. Deepublish. https://books.google.co.id/books?id=oc6XDwAAQBAJ
Wicaksono, A. P. N. (2017). Political Connection and Tax Aggressiveness: A Phenomenon in Indonesia. Accountability, 10(1), 167-180. https://doi.org/10.15408/akt.v10i1.5833
Wulandari, F. F., & Ardhani, D. L. (2023). the Influence of Political Connections and Capital Intensity Ratio on Effective Tax Rate: Moderated by Profitability. Journal of Accounting, 13(2), 150-162.
Published
Issue
Section
License
Copyright (c) 2024 Caroline Yoshe Kolondam, Intan Kurnia Permatasari
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
