THE EFFECT OF TRANSFER PRICING AND PROFITABILITY ON TAX AVOIDANCE WITH RELATED PARTY TRANSACTION AS A MODERATING VARIABLE

Selly Endah Tri Puspita, Moh. Ubaidillah

Abstract


This study aims to analyze the effect of transfer pricing and profitability on tax avoidance, with related party transactions as a moderating variable, in Non-Cyclicals companies in the food and beverage subsector listed on the Indonesia Stock Exchange for the 2020–2023 period. The background of the study is based on the prevalence of tax avoidance practices through transfer pricing mechanisms and special relationships between entities. The research employs a quantitative approach using purposive sampling, resulting in 4 companies as the research sample. Secondary data were obtained from annual financial reports and analyzed using multiple linear regression and Moderated Regression Analysis (MRA). The results show that transfer pricing has a significant positive effect on tax avoidance, while profitability has no significant effect. Additionally, related party transactions are proven to strengthen the relationship between transfer pricing and tax avoidance but do not moderate the effect of profitability on tax avoidance. These findings indicate that transfer pricing practices involving related parties can potentially be used to reduce corporate tax burdens. Therefore, the study provides important implications for regulators to enhance supervision of related party transactions and transfer pricing practices to minimize tax avoidance and protect state revenue.

Keywords: transfer pricing, profitability, tax avoidance, related party transactions,


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References


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