The Effect of Financial Distress and Transfer Pricing on Tax Avoidance in Multinational Companies Listed on the Indonesia Stock Exchange (IDX) for the 2020-2022 Period

Arja Sadjiarto; Devina Jesslyn Prasetyo; Valerie Angelica Go

doi:10.32535/jicp.v6i7.2827

The Effect of Financial Distress and Transfer Pricing on Tax Avoidance in Multinational Companies Listed on the Indonesia Stock Exchange (IDX) for the 2020-2022 Period

Arja Sadjiarto, Devina Jesslyn Prasetyo, Valerie Angelica Go

Abstract

Due to the Covid-19 pandemic conditions from 2020 to 2022, many companies, including multinational corporations, experiencing financial difficulties tend to be more aggressive in tax avoidance to sustain the future viability of the company. On the other hand, companies also utilize transfer pricing mechanisms to avoid high tax payments. This research aims to examine the influence of financial distress and transfer pricing on tax avoidance in multinational companies listed on the Indonesia Stock Exchange (IDX) for the 2020-2022 period. Multiple regression analysis is used to analyze the data collected from a sample of 122 multinational companies listed on the IDX. The research results indicate that financial distress has a positive influence, while transfer pricing has a negative influence on tax avoidance in multinational companies listed on the IDX. Therefore, multinational companies in Indonesia need to consider these factors in managing their tax and financial risks. The implications of these research findings suggest that multinational companies in Indonesia need to consider these factors in managing their tax and financial risks.

Full Text:

PDF

References

Amidu, M., Coffie, W., & Acquah, P. (2019). Transfer Pricing, Earnings Management and Tax Avoidance of Firms in Ghana. Journal of Financial Crime, 26(1), 235–259. https://doi.org/10.1108/jfc-10-2017-0091

Anugerah, G., Herianti, E., & Sabaruddin. (2022). Pengaruh Financial Distress Dan Intensitas Aset Tetap Terhadap Tax Avoidance : Peran Good Corporate Governance Sebagai Pemoderasi. Jurnal Riset Bisnis, 5(April), 190–207.

Djaya, N. K., & Pradipta, A. (2022). Karakteristik Perusahaan dan Corporate Governance terhadap Tax Avoidance. Media Bisnis, 14(1), 29-40. https://doi.org/10.34208/mb.v14i1.1679

Ekaputra, T., & Widyasari. (2019). Faktor-Faktor Yang Mempengaruhi penghindaran pajak Perusahaan Properti Dan real estate. Jurnal Paradigma Akuntansi, 1(3), 937. https://doi.org/10.24912/jpa.v1i3.5598

Eskandar, H., & Ebrahimi, P. (2020). Tax Avoidance and Institutional Ownership : Active vs . Passive Ownership. International Journal of Finance and Managerial Accounting, 5(17), 95–106.

Falbo, T. D., & Firmansyah, A. (2019). Thin Capitalization, Transfer Pricing Aggressiveness, Penghindaran Pajak. Indonesian Journal of Accounting and Governance, 2(1), 1–28. https://doi.org/10.36766/ijag.v2i1.11

Feizi, M., Panahi, E., Keshavarz, F., Mirzaee, S., & Mosavi, S. M. (2016). The Impact of the Financial Distress on Tax Avoidance in Listed Firms: Evidence from Tehran Stock Exchange (TSE). International Journal of Advanced Biotechnology and Research, 7, 373–382.

Hartoto, R. I. (2018). Pengaruh Financial Distress, Corporate Governance dan Konservatisme Akuntansi terhadap Tax Avoidance. Universitas Islam Indonesia.

Hoesada, J. (2021). Teori Akuntansi: dalam Hampiran Historiografis Taksonomis (1st ed.; L. Mayasari, Ed.). Yogyakarta: ANDI. Retrieved from https://books.google.co.id/books?id=z_9cEAAAQBAJ&pg=PA179&dq=teory+agency&hl=jv&sa=X&ved=2ahUKEwiV2ejfsdb3AhXWT2wGHcuVDqkQ6AF6BAgLEAI#v=onepage&q=agensi&f=false

Julianty, I., Ulupui, I. G. K. A., & Nasution, H. (2023). Pengaruh Financial Distress dan Capital Intensity terhadap Tax Avoidance dengan Ukuran Perusahaan sebagai Pemoderasi. Jurnal Informasi, Perpajakan, Akuntansi, Dan Keuangan Publik, 18, 259–282. https://doi.org/http://dx.doi.org/10.25105/jipak.v18i2.17171

Maulana, Marwa, T., & Wahyudi, T. (2018). The Effect of Transfer Pricing, Capital Intensity and Financial Distress on Tax Avoidance with Firm Size as Moderating Variables. Modern Economics, 11(1), 122–128. https://doi.org/10.31521/modecon.v11(2018)-20

Meilia, P., & Adnan. (2017). Pengaruh Financial Distress, Karakteristik Eksekutif, dan Kompensasi Eksekutif terhadap Tax Avoidance pada Perusahaan Jakarta Islamic Index. Jurnal Ilmiah Mahasiswa Ekonomi Akuntansi, 2(4), 84–92.

Nadhifah, M., & Arif, A. (2020). Transfer Pricing, Thin Capitalization, Financial Distress, Earning Management, Dan Capital Intensity terhadap Tax Avoidance Dimoderasi oleh Sales Growth. Jurnal Magister Akuntansi Trisakti, 7(2), 145–170. https://doi.org/10.25105/jmat.v7i2.7731

Nugroho, A. C., Mulyanto, & Afifi, Z. (2022). Pengaruh Financial Distress, Leverage, Sales Growth, Manajemen Laba, dan Intensitas Aset Tetap terhadap Penghindaran Pajak (Studi Empiris pada Perusahaan Manufaktur yang Terdaftar di BEI selama Tahun 2018-2021). JURNAL ECONOMINA, 1(2).

Putra, P. D., Zainal, A., Thohiri, R., & Harahap, K. (2019). Factors Affecting Tax Avoidance in Indonesia and Singapore Practices: A View from Agency Theory. Universiti Malaysia Sabah, 17(2), 24–40.

Richardson, G., Taylor, G., & Lanis, R. (2015). The impact of financial distress on corporate tax avoidance spanning the global financial crisis: Evidence from Australia. Economic Modelling, 44, 44–53. https://doi.org/10.1016/j.econmod.2014.09.015

Saputra, M., Nadirsyah, & Hanifah, H. (2017). The Influence of Ownership Structures , Financial Distress , and Tax Loss Carry Forward on Tax Avoidance ( Study on Manufacturing Company Listed in Indonesia Stock Exchange ). Journal of Resources Development and Management, 31, 2422–8397.

Suyanto, S., Sugiarti, Y., & Kartikasari, C. Y. (2022). The impact of firm size and market concentration on firm productivity. Proceedings of the 19th International Symposium on Management (INSYMA 2022), 1186–1192. https://doi.org/10.2991/978-94-6463-008-4_146

Swandewi, N. P., & Noviari, N. (2020). Pengaruh Financial Distress Dan Konservatisme Akuntansi Pada Tax Avoidance. E-Jurnal Akuntansi, 30(7), 1670. https://doi.org/10.24843/eja.2020.v30.i07.p05

Utami, M. F., & Irawan, F. (2022). Pengaruh Thin Capitalization dan Transfer Pricing Aggressiveness terhadap Penghindaran Pajak dengan Financial Constraints sebagai Variabel Moderasi. Owner: Riset dan Jurnal Akuntansi, 6(1), 386-399. https://doi.org/10.33395/owner.v6i1.607

DOI: https://doi.org/10.32535/jicp.v6i7.2827

Refbacks

There are currently no refbacks.

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Published by:

AIBPM Publisher

Editorial Office:

JL. Kahuripan No. 9 Hotel Sahid Montana, Malang, Indonesia
Phone: +62 341 366222
Email: journal.jicp@gmail.com
Website: http://ejournal.aibpmjournals.com/index.php/JICP

Supported by: Association of International Business & Professional Management

If you are interested to get the journal subscription you can contact us at admin@aibpm.org.

ISSN 2622-0989 (Print)
ISSN 2621-993X (Online)

DOI: Prefix 10.32535 by CrossREF

Journal of International Conference Proceedings (JICP) INDEXED: