Abstract
Transfer pricing is a way conducted by a multinational company to do tax avoidance. Concentrated ownership structure makes the majority shareholders tend to perform a tunneling incentive that could harm minority shareholders. Companies that set bonus mechanism based on the profits will make the management or the board of directors tend to conduct profit manipulation. The aim of this research is to analyze the influence of tax, tunneling incentive and bonus mechanism on transfer pricing decision taken by manufacturing companies listed on the Indonesia Stock Exchange. The sample used on this study is manufacturing companies listed on the Indonesia Stock Exchange in 2012-2014 totaling 69 companies taken using purposive sampling method. The analysis technique used in this study is analysis binary logistic regression. The result of this study shows that tax and tunneling incentive have significantly influence on transfer pricing, while bonus mechanism does not have significant influence on transfer pricing
Highlights
Rapid economic development, without recognizing the country's boundaries, has made the flow of trade transactions between countries, which make it easier and smoother
The Influence of Tax on Transfer Pricing Decision Based on the results of hypothesis testing that has been done, it can be seen that the variable of effective tax rate has a significant effect on the transfer pricing decisions at manufacturing companies listed on the Indonesia Stock Exchange, indicating that the hypothesis is accepted
Tax rates become one of the reasons for many multinational companies to perform transfer pricing practices where the amount of tax payable is a burden to the company so that the company will seek to minimize the amount of the payments
Summary
Without recognizing the country's boundaries, has made the flow of trade transactions between countries, which make it easier and smoother. A number of companies have begun to expand their market by establishing a subsidiary in the country and abroad, which indirectly leading to the formation of multinational corporations. The formation of various organizations and agreements, such as the ASEAN Economic Community, facilitates the trade transactions. Multinational corporations do a lot of transactions with their relation companies in various countries with the aim of gaining maximum profit margin. Multinational corporations always face problems related to the difference in tax rates in each country. Such condition has eventually prompted the multinational corporations to decide transfer pricing. Transfer pricing leads to the problem of manipulation to the Yasfiana Nuril Indriaswari: The influence of tax
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