FACTORS AFFECTING TRANSFER PRICING AGGRESSIVENESS IN INDONESIAN MULTINATIONAL COMPANY

Abstract

Transfer pricing has been cited as the most crucial tax avoidance issue in multinational companies. Transfer pricing transactions may be conducted by a person or an entity that has special relationship with the company which might against the arm’s length principle. As many issues have been arisen regarding tax avoidance through transfer pricing practices, this study wants to examine the factors affecting transfer pricing aggressiveness in multinational companies listed on Indonesia Stock Exchange for year 2013-2017. Sampling method used in this study is purposive sampling. Differ from the previous research, this research will use panel data regression model with Stata software. The sample is hand-collected sample of 120 publicly-listed Indonesian multinational companies. Applying random effect model, this model use leverage and firm size as control variables. The result showed that tax expense, exchange rate and share ownership affect transfer pricing aggressiveness in multinational companies in Indonesia.