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Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
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asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
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Published: 12 November 2024

Determinants of Tax Avoidance in Indonesia: Moderating Role Political Connections

Umi Laila Aristiyaningrum, Falikhatun

Universitas Sebelas Maret, Indonesia

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

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doi

10.31014/aior.1992.07.04.624

Pages: 111-124

Keywords: Political Connection, Tax Avoidance, Thin Capitalisation, Transfer Pricing

Abstract

This research aims to provide empirical evidence regarding thin capitalisation, transfer pricing, and tax avoidance, with political connections serving as moderating variables. The research employs a purposive sampling technique, resulting in a sample of 31 mining companies listed on the Indonesia Stock Exchange from 2013 to 2022. The technique used for hypothesis testing is panel data analysis through the Ordinary Least Squares (OLS) approach. The results of this research indicate that thin capitalisation and transfer pricing have a significant effect on tax avoidance. Additionally, this research reveals that the role of political connections can strengthen the impact of transfer pricing on tax avoidance but does not demonstrate that political connections can reinforce the effect of thin capitalisation on tax avoidance. The findings of this research are expected to serve as a basis for government considerations in establishing tax-related regulations. This study recommends that future research utilise different research subjects for comparison, add other independent variables outside the current model that may influence tax avoidance, and apply alternative tax avoidance measures, such as book-tax differences and tax shelters.

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