Abstract
The multiplication of direct investment in Indonesia is not equal to adequate tax regulations. In turn, it creates loopholes for the minimisation of tax burdens through thin capitalisation. The purpose of this research is to analyse the factors affecting tax avoidance using thin capitalisation. The independent variables in this research are multi-nationality, the utilisation of tax havens and institutional ownership, while the dependent variable in this research is tax avoidance. This study uses secondary data obtained from readily accessible sources and the annual reports of 122 multi-national enterprises listed on the Indonesian Stock Exchange. The determination method of sampling is by way of purposive sampling, that is sample selection according to specific criteria. The data analysis method used is path analysis. The results of the research show that multi-nationality and the utilisation of a tax haven positively affect thin capitalisation, while institutional ownership has a negative effect on thin capitalisation. Thin capitalisation has a positive impact on tax avoidance. Indirectly, multi-nationality and the utilisation of taxes have positive effects on tax avoidance through thin capitalisation, while institutional ownership negatively affects tax avoidance through thin capitalisation.
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