Abstract
The purpose of this study is to provide empirical evidence on the influence of taxes, tunneling incentives for income shifting, financial reporting and intangible assets on transfer pricing decisions. The data used is secondary data in the form of annual financial statements downloaded from the official website of IDX www.idx.co.id. The population of this study is a manufacturing company registered in IDX for the period 2016-2018. Sample selection technique using purposive sampling method so that 33 companies are obtained according to the criteria. The analysis technique uses multiple linear regressions tested with SPSS version 20 applications. The results showed that taxes, tunneling incentives for income shifting, and financial reporting had no effect on transfer pricing decisions. Meanwhile, intangible assets have a significant positive effect on transfer pricing decisions.
Highlights
This research aims to provide empirical evidence on the influence of taxes, tunneling incentives for income shifting, financial reporting and intangible assets on transfer pricing decisions using a sample of manufacturing companies registered in Indonesia Stock Exchange (IDX) for the period 2016-2018
Based on the results of hypothesis testing, the following conclusions can be drawn: 1. Taxes have no effect on transfer pricing decisions
These results provide evidence that tax is not the main reason companies apply transfer pricing
Summary
This research aims to provide empirical evidence on the influence of taxes, tunneling incentives for income shifting, financial reporting and intangible assets on transfer pricing decisions using a sample of manufacturing companies registered in IDX for the period 2016-2018. If an exchange involves a multinational, interdivision, or intersegment company that crosses the tax jurisdiction of a different country, the multinational company is motivated to act non-neutral to the exchange price. This motivation arises because there are economic benefits, namely overall tax cost savings (Tampubolon & Al Farizi, 2018). Differences in tax rates between countries present an opportunity for business entities to take advantage of the difference in rates by shifting income or fees from business entities in high-tax countries to other business entities in a group in a tax haven country in order to save tax costs (Tampubolon & Al Farizi, 2018). If companies use transfer pricing to minimize their global taxes, the companies
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