Tax Avoidance in the Mining Industry: Transfer Pricing, Earnings Management, and Foreign Ownership

This study investigates the determinants of tax avoidance in Indonesian mining companies, focusing on the roles of transfer pricing, earnings management, and foreign ownership, with the tax burden index (TBI) as a moderating variable. The analysis covers 65 firm-year observations from 13 mining sector companies listed on the Indonesia Stock Exchange during 2019–2023, selected through purposive sampling. Tax avoidance is measured using the Cash Effective Tax Rate (CETR), and panel data regression with a centering approach is employed to address potential multicollinearity in the moderation model. The empirical results reveal that, simultaneously, transfer pricing, earnings management, and foreign ownership influence tax avoidance. Partially, only earnings management exhibits a statistically significant positive effect, highlighting the role of managerial discretion in facilitating aggressive tax behavior. Transfer pricing and foreign ownership show no significant effect, reflecting the impact of regulatory enforcement and disclosure requirements in the mining sector. While the TBI demonstrates a direct positive association with tax avoidance, its moderating effect on the relationship between transfer pricing and tax avoidance is not supported. These findings reinforce the relevance of agency theory, fiscal psychology, and fraud deterrence perspectives in explaining corporate tax behavior. Practically, the study highlights the importance of risk-based supervision, earnings quality monitoring, and robust internal control systems to mitigate tax avoidance risks. The results provide insights for regulators, auditors, and mining companies to enhance fiscal governance and support sustainable compliance.