Determinants of Tax Avoidance in Indonesia: Moderating Role Political Connections

This research aims to provide empirical evidence regarding thin capitalisation, transfer pricing, and tax avoidance, with political connections serving as moderating variables. The research employs a purposive sampling technique, resulting in a sample of 31 mining companies listed on the Indonesia Stock Exchange from 2013 to 2022. The technique used for hypothesis testing is panel data analysis through the Ordinary Least Squares (OLS) approach. The results of this research indicate that thin capitalisation and transfer pricing have a significant effect on tax avoidance. Additionally, this research reveals that the role of political connections can strengthen the impact of transfer pricing on tax avoidance but does not demonstrate that political connections can reinforce the effect of thin capitalisation on tax avoidance. The findings of this research are expected to serve as a basis for government considerations in establishing tax-related regulations. This study recommends that future research utilise different research subjects for comparison, add other independent variables outside the current model that may influence tax avoidance, and apply alternative tax avoidance measures, such as book-tax differences and tax shelters.

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Publication Details

Journal
Journal of Economics and Business
Published
2024-11-11
DOI
https://doi.org/10.31014/aior.1992.07.04.624
Primary Topic
Corporate Taxation and Avoidance
Type
article
Field-Weighted Citation Impact
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article

Determinants of Tax Avoidance in Indonesia: Moderating Role Political Connections

Umi Laila Aristiyaningrum, Falikhatun
Journal of Economics and Business
Corporate Taxation and Avoidance
article

Determinants of Tax Avoidance in Indonesia: Moderating Role Political Connections

Umi Laila Aristiyaningrum, Falikhatun
article en

Abstract

This research aims to provide empirical evidence regarding thin capitalisation, transfer pricing, and tax avoidance, with political connections serving as moderating variables. The research employs a purposive sampling technique, resulting in a sample of 31 mining companies listed on the Indonesia Stock Exchange from 2013 to 2022. The technique used for hypothesis testing is panel data analysis through the Ordinary Least Squares (OLS) approach. The results of this research indicate that thin capitalisation and transfer pricing have a significant effect on tax avoidance. Additionally, this research reveals that the role of political connections can strengthen the impact of transfer pricing on tax avoidance but does not demonstrate that political connections can reinforce the effect of thin capitalisation on tax avoidance. The findings of this research are expected to serve as a basis for government considerations in establishing tax-related regulations. This study recommends that future research utilise different research subjects for comparison, add other independent variables outside the current model that may influence tax avoidance, and apply alternative tax avoidance measures, such as book-tax differences and tax shelters.

Journal of Economics and BusinessVol. 7(4)
Reduced inequalities
Openalex Percentile: Top 67%
Corporate Taxation and Avoidance
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Determinants of Tax Avoidance in Indonesia: Moderating Role Political Connections — Umi Laila Aristiyaningrum, Falikhatun · Journal of Economics and Business (2024) | TGRS Research Map | TGRS