CanThin Capitalization And Transfer PricingActivities Reduce The Tax Burden?

CanThin Capitalization And Transfer PricingActivities Reduce The Tax Burden?

Manufacturing Companies, Quantitative-Explanation, Tax Avoidance, Thin Capitalization, Transfer Pricing, Institutional Ownership

The purpose of this researchis to examine the effect of thin capitalization and transfer pricing as a vehiclefor companies to reduce their corporate tax burden. The research method used is a quantitative-explanation, with the proxy of tax avoidanceis ETR. This researchfound that thin capitalization activities and transfer prices have a negativeand significanteffect on tax avoidance. This researchalso found that institutional ownership strengthens theeffect of thin capitalization and transfer pricingon tax avoidance. This researchcontributes to the literature on using the PLI ratio, namely ROCEas a measurement tool for transfer pricing activity, which provides a new methodological contribution to tax avoidance researchthrough transfer pricing activities in Indonesia's manufacturing companies. This study provesthat Return On Capital Employed can be used as a transfer pricing activity measure

Winarto1,Apollo Daito2

https://dinastipub.org/DIJEFA/article/view/795/549

Universitas Mercu Buana,

29 March 2021

Winarto

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