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Factors causing tax avoidance practices in multinational companies: Evidence from Indonesia

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  • Rizky Nurdiansyah

    (Faculty of Economics and business, Universitas Pembangunan Nasional Veteran Jakarta, Jalan RS. Fatmawati Raya, Pd. Labu, Kec. Cilandak, Jakarta, Indonesia)

  • Masripah

    (Associate Professor, Faculty of Economics and business, Universitas Pembangunan Nasional Veteran, Jalan RS. Fatmawati Raya, Pd. Labu, Kec. Cilandak, Jakarta, Indonesia)

Abstract

Tax avoidance by the multinational company has been at the top of the international tax policy agenda since the global financial crisis in 2008. This level of tax evasion raises concerns that large multinational corporations pay meager effective tax rates. Therefore, this study aims to obtain empirical evidence of the influence of transfer pricing, thin capitalization, and tax heaven utilization on corporate tax avoidance. This paper aims to examine the effects of factors that cause tax avoidance practices in multinational companies. This study used 37 multinational companies listed on the Indonesia Stock Exchange (IDX) for 2018-2020. This study used a purposive sampling method that produced 111 suitable samples. The analytical method used is multiple linear regression analysis through Stata 12 software. Main findings of the study demonstrate that (i) Transfer pricing has a positive effect on the practice of Tax Avoidance (ii) Thin capitalization does not affect the practice of Tax Avoidance, and finally (iii) Tax heaven utilization has a positive effect on the practice of Tax Avoidance. Key Words:Tax voidance, Multinonal Companies, Indonesia, IDX

Suggested Citation

  • Rizky Nurdiansyah & Masripah, 2023. "Factors causing tax avoidance practices in multinational companies: Evidence from Indonesia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(3), pages 391-398, April.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:3:p:391-398
    DOI: 10.20525/ijrbs.v12i3.2565
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