Transfer Pricing Research Articles

The Effect Of Transfer Pricing And Political Connections On Tax Avoidance With Profitability As A Moderating Variable

Tax avoidance is an effort taken to reduce tax liabilities and maximize after-tax income that is carried out legally and safely for taxpayers because it does not conflict with tax provisions. The purpose of this study is to analyze the effect of transfer pricing, political connections, on tax avoidance with profitability as a moderating variable in multinational companies in the manufacturing sector listed on the Indonesia Stock Exchange in 2018-2022. The data obtained in this study come from the annual reports of multinational companies in the manufacturing sector listed on the Indonesia Stock Exchange in 2018-2022. The data analysis technique used in this study was purposive sampling and obtained 66 companies with a research period of 5 years, namely 2018-2022 so that 330 samples were obtained. The analysis method used in this research is multiple linear regression analysis and MRA. The results of this study indicate that the transfer pricing variable has a negative effect on tax avoidance but the transfer pricing variable has a positive effect on tax avoidance with moderating profitability, while political connections have no effect on tax avoidance even with moderating profitability.

Pricing of AI-Generated Content

This article examines the transfer pricing implications for multinational enterprises in relation to AI-generated content. It provides an overview of the origins of value creation and highlights specific areas where additional value can be recognized. In addition, the article provides transfer pricing analysis of two case studies regarding pricing of value creation as a result of AI-generated content and the challenges that may arise in practice.

COMPARATIVE ANALYSIS OF TRANSFER PRICING LEGISLATION IN THE REGULATORY FRAMEWORK OF EU MEMBER STATES

The article carries out a comparative analysis and assessment of the adequacy of legal regulation of transfer pricing in the EU Member States. The necessity and importance of studying foreign experience in building and improving the legal framework for transfer pricing is substantiated. The authors determine that the relevance of transfer pricing and related issues both in terms of ensuring the proper functioning of the single market and eliminating base erosion and profit shifting is confirmed by the existence of a special advisory body under the European Commission - the Joint Transfer Pricing Forum (JTPF), which advises the European Commission on transfer pricing taxation. The article identifies the main aspects of transfer pricing regulation in the EU Member States with a view to a detailed analysis of the regulatory framework. The criteria of related parties in the EU transfer pricing legislation are studied. It is found that a common feature in the definition of related parties is the direct or indirect influence of one person on another. The author examines and compares the grounds for conducting an audit in the EU transfer pricing legislation and finds that in the vast majority of EU Member States there is a so-called "self-assessment" regime for companies, according to which the taxpayer must ensure compliance with the transfer pricing rules; the risk factors that are relevant for conducting an audit of transfer pricing transactions are legally defined; common factors for the sample of countries studied are: unprofitability of a group of companies against the background of profitability of other entities. It is concluded that the studied foreign experience of regulatory and legal regulation of transfer pricing transactions on the example of individual EU Member States has shown a high level of unification of legislation in the field of transfer pricing, with minor differences in the provisions of the national legal framework; the differences are mainly in the systematic nature of determining the criteria of relatedness of parties in transfer pricing transactions and the grounds for conducting audit procedures on such transactions.

The Effect of Transfer Pricing and Profitability on Tax Avoidance Empirical Study in Industrial Sector Companies

This study aims to evaluate the influence of transfer pricing and profitability on tax avoidance in industrial sector companies listed on the Indonesia Stock Exchange (IDX) during the period 2019-2023. The analytical methods employed include descriptive statistical analysis, classical assumption tests, multiple linear regression analysis, t-tests, and the determination coefficient test using SPSS software with a 5% significance level. The sample used in this study consists of 139 observations. The results indicate that transfer pricing has a significant effect on tax avoidance, while profitability does not have a significant impact on tax avoidance. These findings suggest that companies tend to use transfer pricing strategies to minimize tax burdens and increase after-tax profits. Conversely, changes in profitability levels cannot be considered a reliable indicator to predict changes in corporate tax avoidance behavior. Thus, this study highlights the importance of transfer pricing as a key factor in corporate tax avoidance strategies, while profitability does not show a significant relationship with tax avoidance. These findings contribute to the literature on tax avoidance and can serve as a reference for policymakers in understanding the dynamics of tax avoidance in the industrial sector.

Coca-Cola Transfer Pricing Dispute: United States Case Analysis and Tax Policy Lessons for Indonesia

Decision of the Coca-Cola transfer pricing dispute in the United States Tax Court, which resulted in tax underpayment, can be used as a lesson for Indonesia. This research method is doctrinal, with a law, case, concept and interpretation approach. The data studied is secondary data in the form of laws, cases and relevant references, which are analyzed to obtain conclusions and recommendations. Research shows that the court considered using the Comparable Profits Method by tax authorities to evaluate the profitability of The Coca-Cola Company's supply points, given the difficulty of valuing intangible assets directly and the need for disproportionate profit adjustments. To avoid similar problems, companies in Indonesia must use transfer pricing methods that are reliable and appropriate to local conditions, as well as ensure good intellectual property management and documentation transparency, while tax authorities must monitor transactions between affiliated entities by international standards and the Arm's Length Principle.

The Impact of Bonus Mechanisms, Tunneling Incentives, and Good Corporate Governance (GCG) on Transfer Pricing Activities

The Impact of Bonus Mechanisms, Tunneling Incentives, and Good Corporate Governance (GCG) on Transfer Pricing Activities

Primary, Corresponding and Secondary Transfer Pricing Adjustments

Primary, Corresponding and Secondary Transfer Pricing Adjustments

Influences on Transfer Pricing Decisions: The Roles of Tunneling Incentives, Debt Covenants, and Bonus Mechanisms with Tax Minimization as a Moderator

Influences on Transfer Pricing Decisions: The Roles of Tunneling Incentives, Debt Covenants, and Bonus Mechanisms with Tax Minimization as a Moderator

DEMPE – Still a Long Way to Go

An integral part of the BEPS Action Plan is the Development, Enhancement, Maintenance, Protection and Exploitation (DEMPE) concept, which is intended to ensure a fair allocation of profits stemming from transactions that involve intangible assets. However, even though the DEMPE concept was included in the OECD Transfer Pricing Guidelines, its impact on the activities and profits of MNEs remains unclear. A survey conducted in 2023 revealed differing attitudes to the impact of DEMPE on MNEs’ income distribution and business operations, indicating a growing awareness of the concept but also highlighting the importance of clearer guidance on its application and integration with existing transfer pricing methodologies.

Revenue Service 6 March 2024 TC Judgment Case No. IT 14302

This article deals with the first transfer pricing case to come before the courts in South Africa which deals with the transfer pricing provisions contained in the South African tax legislation. It has attracted much interest and attention from tax practitioners in South Africa. It relates to the determination of an arm’s length royalty in respect of intellectual property in the form of a trademark. After a consideration of various methods to be used in determining the arm’s length rate of the royalty, the court held that the comparable uncontrolled price method was the appropriate method to be used in the circumstances and that the appellant possessed a valid internal comparable. Accordingly, the court upheld the appeal of the taxpayer.

Pengaruh Mekanisme Bonus, Debt Covenant, dan Profitabilitas terhadap Transfer Pricing

This research aims to determine the influence of bonus mechanisms, debt covenants, and profitability on transfer pricing. The population in this study are mining sector companies listed on the Indonesia Stock Exchange in their financial reports for the 2019-2023 period. The sampling technique in this research used a purposive sampling method and a sample of 57 companies was obtained. The analysis technique used is multiple linear regression analysis using SPSS version 22.0 software. The results of this research show that the bonus and debt covenant mechanism has a positive and significant effect on transfer pricing and profitability has a negative and significant effect on transfer pricing.

The effect of firm size and transfer pricing on tax aggressiveness with institutional ownership as a moderating variable

This study aims to empirically prove the influence of firm size and transfer pricing on tax aggressiveness with institutional ownership as a moderating variable. The independent variables used in this research are firm size and transfer pricing. The dependent variable used in this research is tax aggressiveness and the moderating variable uses institutional ownership. The population in this study are basic materials sector companies listed on the Indonesia Stock Exchange in 2018-2022. The sample selection method used purposive sampling, based on this method 14 (fourteen) companies were obtained, the data that was successfully used as a research sample was 8 (eight) companies with observations for 5 (five) years. The data used in this research is secondary data in the form of annual financial reports. The results of this research indicate that Firm Size and Transfer Pricing simultaneously have a significant effect on Tax Aggressiveness. The results of research conducted partially state that Firm Size and Transfer Pricing influence Tax Aggressiveness. Apart from that, Institutional Ownership is unable to moderate the influence of firm size and transfer pricing on Tax Aggressiveness.

Вопросы применения медианного значения рыночного интервала в регулировании трансфертных цен

Material changes in the tax regulation of transfer pricing have occurred in the early 2024, such changes include the introduction of the median value of the market price interval (financial parameters). This is a new instrument in the regulation of transfer pricing, its introduction was not justified in the bill discussion period, but its effect is significant for tax obligations of Russian companies. The new instrument in the transfer pricing system creates additional risks for taxpayers, as well as for the state in terms of economic relations with regard to timely and full calculation and payment of taxes, as well as for parties to international economic activities and internal relations. This predetermines the research subject: the conditions of and procedure for applying the median value for the purposes of tax control of intracompany transaction prices. The research methodology is based on an analysis of transfer pricing recommendations of the ОECD in АННОТАЦИИ Налоги № 2-2024 47 АННОТАЦИИ terms of applying statistical tools to determine the price of the transaction under analysis, provisions of foreign regulations that determine the pricing procedure in transactions between related entities. Special attention is paid to an analysis of foreign court judgments on determination of the market price of intracompany transactions. An analysis of the ОECD recommendations has given an opportunity to single out obligatory conditions for the application of the median value. The author has identified a tendency towards harmonization of approaches to using the median value in foreign countries and the general trend to clarifying regulations in 2022-2024. The judicial practice shows that irrespective of the activity type or type of transactions performed by group subdivisions, courts award uniform judgments in terms of applying the median value and take into account the ОECD recommendations when passing a judgment. The paper concludes that Russian taxpayers face an additional tax risk rooted in the differences in the approach towards the application of the median value in the Tax Code of the Russian Federation and the OECD Transfer Pricing Guidelines for transnational corporations and tax administrations used to regulate taxation of transactions between related entities in explanations of tax authorities and the judicial practice. The scientific novelty of the study lies in the determination of tendencies towards applying the median value for transfer pricing purposes, evaluation of tax consequences of the novelty for Russian taxpayers.

Multilevel and Multidirection Trust in Transfer Pricing Dispute Resolution: Evidence From Indonesia

Multilevel and Multidirection Trust in Transfer Pricing Dispute Resolution: Evidence From Indonesia

Tax Minimization sebagai Pemoderasi Determinan Praktik Transfer Pricing

Objectives: Testing tax minimization as a moderator of the impact of tax burden, profitability and tunneling incentives in influencing transfer pricing practices.Design/method/approach: Associative quantitative approach. Population of coal subsector industrial companies registered on the IDX for the 2017-2021 period. From the Purposive Sampling technique of 11 companies over five years, a total of 55 data were observed. Moderated regression analysis with panel data and analysis tools, namely E-views software.Results/findings: Tax minimization as a potential moderating variable is able to moderate the tax burden on transfer pricing practices insignificantly. Profitability and Tunneling Incentives have a significant positive influence on transfer pricing practices. Meanwhile, tax burden and tax minimization have no influence on transfer pricing practices.Theoretical contribution: These findings are able to prove that transfer pricing practices can be influenced by internal and external factors of the Company and support agency theory regarding conflicts of interest between the Company, shareholders and the government regarding aspects of taxation and transfer pricing and become a reference for further research.Practical contribution: Become a reference for the tax authorities or DJP in formulating policies regarding tax regulations related to transfer pricing by providing strict and more detailed supervision for companies that carry out transfer pricing.Limitations: Moderating variables are not used to moderate all independent variables in influencing the dependent variable.

DOES TRANSFER PRICING, SALES GROWTH, AND CAPITAL INTENSITY AFFECT TAX AGGRESSIVENESS?

Purpose: This research aims to analyze the effect of transfer pricing, sales growth, and capital intensity on tax aggressiveness. Methodology/approach: The population of this research are mining companies listed on the Indonesia Stock Exchange (IDX) in 2018-2022, with a total of 83 companies. Data analysis technique uses descriptive analysis and multiple regression analysis using the SPSS 27 to analyze. Findings: The results of this research show that transfer pricing have a positive effect on tax aggressiveness. Meanwhile, sales growth and capital intensity variables have a negative effect on tax aggressiveness. Transfer pricing, sales growth, and capital intensity collectively have a significant effect on the level of corporate tax aggressiveness. Practical implications: The implications of this research can enhance knowledge and be used as a consideration or input for the government in economic decision-making and in formulating tax policies to address future weaknesses in tax regulations. Originality/value: This research examines mining companies in the most recent 5 years period 2018-2022.

The Impact of Tunneling Incentive Bonus Mechanism and Debt Covenant on Transfer Pricing

Transfer pricing decisions are influenced by several factors, one of which is tunneling incentives. This study aims to determine the influence of Tunneling Incentives, Bonus Mechanisms, and Debt Covenants on Transfer Pricing. This study analyzes manufacturing companies listed on the Indonesia Stock Exchange. In this study, the input data comes from the company's annual report which is a research sample starting from 2018-2021 with criteria so that a total sample of 15 companies is obtained. Furthermore, the input data will be processed according to quantitative methods. The data analysis technique uses descriptive statistics, classical assumption tests, multiple linear regression tests and hypothesis testing. The results of this study show that the following variables: (1) Tunneling Incentive have a negative and significant influence on Transfer Pricing; (2) The Bonus Mechanism has a negative and significant effect on Transfer Pricing; (3) The Debt Covenant has a positive and significant effect on Transfer Pricing. Based on the results of the analysis and discussion, it can be concluded that the Tunneling Incentive has a negative and significant influence on Transfer Pricing, which means that the higher the tunneling incentive, the lower the transfer pricing carried out by the company.

THE MODERATING ROLES OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE DISCLOSURES ON COMPANY OWNERSHIP STRUCTURE AND TAX AVOIDANCE

Purpose: The aim of this study is to investigate the moderating roles of environmental, social, and governance disclosures in the relationship between company ownership structure and tax avoidance was investigated. The company ownership structure consist of family ownership, foreign ownership, and institutional ownership. Methodology/approach: Quantitative is the type of this research with using secondary data. Data collected from company reports that is annual reports, sustainability reports, and OSIRIS database. The data was analysed using hypothesis tests. Findings: The results of this study demonstrated that family ownership has a positive influence and foreign ownership has a negative influence, while institutional ownership has no influence on tax avoidance. Furthermore, this study revealed that environmental, social, and governance disclosures can weaken the influence of family ownership relationships, strengthen the influence of foreign ownership relationships, and prevent tax avoidance. In addition, environmental, social, and governance disclosures cannot moderating roles the influence of the relationship between institutional ownership and tax avoidance. Practical implications: The tax authority can improve the regulations about procedures for implementing transfer price agreements in special company relationships by considering environmental, social, and governance disclosures, so as to prevent an increase in tax avoidance. Originality/value: This study adds environmental, social, and governance disclosures to classify the inconsistency previous research which are thought to have a combined influence on the relationship between company ownership structure and tax avoidance.

Faktor yang Mempengaruhi Keputusan Transfer Pricing pada Perusahaan Sektor Consumer Non-Cyclicals

The study aimed to determine the impact of Tax Minimization, Company Size, Debt Covenant, and Profitability on the Transfer Pricing decision in non-cyclical companies. The theoretical framework supporting this study is the agency theory. The study used a quantitative causal comparative approach with a population and sample of non-cyclical companies listed on the Indonesia Stock Exchange (BEI) from 2018 to 2022. The sample was obtained based on predefined criteria. The analysis in this study included descriptive statistics, classical assumption tests, and linear regression analysis, which was processed using IBM SPSS version 25. Based on the test results, it was found that: (1) Tax Minimization had a significant negative impact on transfer pricing; (2) Company Size had not a significant positive impact on transfer pricing; (3) Debt Covenant had a significant negative impact on transfer pricing; (4) Profitability had not a significant negative impact on transfer pricing.

How to Choose Recycling Mode between Monopoly and Competition by Considering Blockchain Technology?

Enterprises adopting a circular economy approach can effectively solve the severe situation of resources and the environment, and recycling is considered an effective means to solve environmental issues. Simultaneously, blockchain technology (BT) has been used to enhance product quality trust. However, there is limited literature on how to choose between monopolistic and competitive recycling modes by considering BT. This paper uses a game involving a manufacturer, a retailer, and a third-party recycler (TPR) in a closed-loop supply chain (CLSC). The retailer can recycle on itself and compete with the TPR for recycling used products. The results show that BT adoption could increase the recycling rate and demand for remanufactured products. BT benefits the firms in the CLSC when they control usage costs, regardless of whether competitive recycling mode is used or not. In addition, whether BT is adopted or not, CLSC firms prefer competitive recycling mode only when the competitive intensity exceeds a specific threshold. Moreover, choosing an appropriate recycling mode can alleviate the negative impact of BT on the environment, then an all-win result can be obtained for CLSC firms, consumers, and society. These results can give suggestions for managers to optimize their supply chains regarding adopting BT and implementing recycling mode. In the future, we can expand our research on the transfer price of used products, the positive and negative effects of BT, and BT cost-sharing strategies.