THE FACTORS INFLUENCING TRANSFER PRICING AGGRESIVENESS ON MANUFACTURING COMPANIES IN PERIOD 2012 - 2014

Abstract

The purpose of this study was to determine whether the tax, foreign ownership and firm size has influence on transfer pricing aggresiveness on the manufacture companies listed in Indonesia Stock Exchange. The uses of financial statement need the information about the condition of the company as a basis of decision making. Transfer Pricing is one of the issues that many tax avoidance committed by multinational companies in Indonesia. Through transfer pricing practices, an efforts to minimize the tax burden carried by diverting income and expenses of a company to other related parties in the country which has low tax rates. The population in this research is manufacture companies listed in Indonesia Stock Exchange. The samples are selected by using purposive sampling method. The research period for analysis is during 2012-2014. Hypothesis testing is performed by using Multiple Regression with 5% significance level. Moreover, the samples criteria are limited to (1) Manufacture Companies listed in Indonesia Stock Exchange. (2) Companies that has portion minimum 20% in foreign ownership. (3) Companies that publish related party transaction in their financial statement. The population of the research totaled 138 companies. Based on predefined criteria obtained samples of 42 companies. The results showed that tax has significance influence to transfer pricing aggresiveness. Otherwise, the results showed that forign ownership and firm size has no significant influence transfer pricing aggresiveness. Simultaneously, tax, foreign ownership, and firm size statistically significant impact toward transfer pricing aggresiveness with 5.77% adjusted R-square.