The Effect of Taxes and Bonus Mechanisms in Moderating Profitability on Transfer Pricing
Article Sidebar
Published
Apr 29, 2023
Main Article Content
Abstract
One factor that encourages companies to do transfer pricing is the bonus mechanism. Bonusecanism is used as a moderating, reinforcing, or motivation-weakening variable of tranfer pricing. The purpose of this study is to analyze the causality between tax and transfer pricing in companies related to the manufacturing and non-financial services sectors in Indonesia and to analyze the role of bonus mechanism moderators in strengthening the effect of profitability on transfer pricing in companies related to the manufacturing and non-financial services sectors in Indonesia. This type of research is explanatory research, which explains one variable's causality relationship to another. This study used the analysis of the Granger causality test and hypothesis testing using the coefficient of determination test, F test and t-test. The sample in this study is companies members of the KOMPAS 100 index in 2010-2020, totaling 100 companies. Based on the study's results, it can be concluded that: 1) There is a causality relationship between tax and transfer pricing. The amount of tax has a positive effect on transfer pricing. On the other hand, transfer pricing also positively affects the amount of tax. This suggests a causality link between tax and transfer pricing and as a form of tax avoidance by multinational companies; 2) The role of the bonus mechanism does not moderate the amount of profitability to transfer pricing. The decision of managers to pursue bonuses does not affect the amount of profitability to transfer pricing.
Article Details
Issue
Section
Articles
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
References
Amidu, M., Coffie, W., & Acquah, P. (2019). Transfer pricing, earnings management and tax avoidance of firms in Ghana. Journal of Financial Crime, 26(1), 235–259. https://doi.org/10.1108/JFC-10-2017-0091
Barker, & Maguire. (2017). Experts by Experience: Peer Support and its Use with the Homeless. Community Ment Health.
Baroroh, N., Malik, S., & Jati, K. W. (2021). The role of profitability in moderating the factors affecting transfer pricing. Accounting, 7(5), 1203–1210. https://doi.org/10.5267/j.ac.2021.2.018
Bartelsman, E. J., & Beetsma, R. M. W. J. (2003). Why pay more? Corporate tax avoidance through transfer pricing in OECD countries. Journal of Public Economics, 87(9–10), 2225–2252. https://doi.org/10.1016/S0047-2727(02)00018-X
Bazile, D., Pulvento, C., Verniau, A., Al-Nusairi, M. S., Ba, D., Breidy, J., Hassan, L., Mohammed, M. I., Mambetov, O., Otambekova, M., Sepahvand, N. A., Shams, A., Souici, D., Miri, K., & Padulosi, S. (2016). Worldwide evaluations of quinoa: Preliminary results from post international year of quinoa FAO projects in nine countries. Frontiers in Plant Science, 7(June). https://doi.org/10.3389/fpls.2016.00850
Bernard. (2006). Research Methods in Anthropology: Qualitative and Quantitative Approaches. Altamira Press.
Borge, M. Z., & Byberg, K. (2018). The tightness of country-specific income shifting regulation and multinationals’ transfer pricing: an empirical study of European multinational corporations and their …. https://openaccess.nhh.no/nhh-xmlui/handle/11250/2585905%0Ahttps://openaccess.nhh.no/nhh-xmlui/bitstream/handle/11250/2585905/masterthesis.PDF?sequence=1
Brock, G., & Pogge, T. (2014). Global tax justice and global justice. Moral Philosophy and Politics, 1(1), 1–15. https://doi.org/10.1515/mopp-2014-0999
Chan, K. H., Lo, A. W. ., & Mo, P. (2019). An Empirical Analysis Of The Chane In Tax Audit Focus On International Transfer Pricing. Journal Of International Accounting, Auditing and Taxation.
Davies, S. C., Winpenny, E., Ball, S., Fowler, T., Rubin, J., & Nolte, E. (2014). For debate: A new wave in public health improvement. The Lancet, 384(9957), 1889–1895. https://doi.org/10.1016/S0140-6736(13)62341-7
Ginting, D. B., Triadiarti, Y., & Purba, E. L. (2020). Pengaruh Profitabilitas, Pajak, Mekanisme Bonus, Kepemilikan Asing, Debt Covenant Dan Intangible Assets Terhadap Transfer Pricing (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di Bei Tahun 2015 – 2017). JAKPI - Jurnal Akuntansi, Keuangan & Perpajakan Indonesia, 7(2), 32. https://doi.org/10.24114/jakpi.v7i2.18155
Guan, W., Liang, W., Zhao, Y., Liang, H., Chen, Z., Li, Y., Liu, X., Chen, R., Tang, C., Wang, T., Ou, C., Li, L., Chen, P., Sang, L., Wang, W., Li, J., Li, C., Ou, L., Cheng, B., … He, J. (2020). Comorbidity and its impact on 1590 patients with COVID-19 in China: a nationwide analysis. The European Respiratory Journal, 55(5), 640. https://doi.org/10.1183/13993003.00547-2020
Kananto, S. (2019). The Influences of Tax, Bonus Mechanism, Leverage and Company Size Through Company Decision on Transfer Pricing. 73(Aicar 2018), 207–212. https://doi.org/10.2991/aicar-18.2019.45
Nazihah, Azwardi, & Fuadah. (2019). The Effect Of Tax, Tunneling Incentive, Bonus Mechanisms, And Firm Size On Transfer Pricing. Journal of Accounting, Finance and Auditing Studies.
Nugroho, A. D., & Kunartinah. (2012). ANALISIS PENGARUH KOMPENSASI DAN PENGEMBANGAN KARIER TERHADAP KEPUASAN KERJA DENGAN MEDIASI MOTIVASI KERJA (Studi pada PNS di Sekretariat Daerah Kabupaten Pekalongan). Jurnal Bisnis Dan Ekonomi (JBE), 19(2), 153–169.
Rego, & Wilson. (2012). Equity Risk Incentives and Corporate Tax Aggressiveness. Journal of Accounting Research.
Richardson, S., Hirsch, J. S., Narasimhan, M., Crawford, J. M., McGinn, T., Davidson, K. W., Barnaby, D. P., Becker, L. B., Chelico, J. D., Cohen, S. L., Cookingham, J., Coppa, K., Diefenbach, M. A., Dominello, A. J., Duer-Hefele, J., Falzon, L., Gitlin, J., Hajizadeh, N., Harvin, T. G., … Zanos, T. P. (2020). Presenting Characteristics, Comorbidities, and Outcomes Among 5700 Patients Hospitalized With COVID-19 in the New York City Area. JAMA, 323(20), 2052–2059. https://doi.org/10.1001/JAMA.2020.6775
Richardson, T., Elliott, P., & Roberts, R. (2013). The relationship between personal unsecured debt and mental and physical health: A systematic review and meta-analysis. Clinical Psychology Review, 33(8), 1148–1162. https://doi.org/10.1016/j.cpr.2013.08.009
Ross L. Watts, & Jerold L. Zimmerman. (1990). Positive Accounting Theory: A Ten Year Perspective. The Accounting Review, 65(1), 131–156. https://www.jstor.org/stable/247880
Scott. (2011). Financial Accounting Theory.
Setyadi, R., & Prabowo, H. N. (2021). Risk Management Analysis of Bus Transportation Application Using Cobit 4.1. JURTEKSI (Jurnal Teknologi Dan Sistem Informasi), 7(2), 203–212. https://doi.org/10.33330/jurteksi.v7i2.1046
Sikka, P., & Willmott, H. (2010). The dark side of transfer pricing: Its role in tax avoidance and wealth retentiveness. Critical Perspectives on Accounting, 21(4), 342–356. https://doi.org/10.1016/j.cpa.2010.02.004
Solikhah, B., & Maulina, U. (2021). Factors influencing environment disclosure quality and the moderating role of corporate governance. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1876543
Sugiyono. (2017). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. Bandung : Alfabeta, CV.
Susanti, A., & Firmansyah, A. (2018). Determinants of Transfer Pricing Decisions in Indonesia Manufacturing Companies. Jurnal Akuntansi Dan Auditing Indonesia, 22(2), 695–709. https://www.neliti.com/id/publications/136376/analisis-pengaruh-rasio-keuangan-terhadap-perubahan-laba
Taylor, & Richardson. (2012). The determinants of Thinly Capitalized Tax Avoidance Structure: Evidence From Australian Firmg. Journal Of International Accounting, Auditing and Taxation.
Taylor, Richardson, & Ross. (2013). The Determinant Of Tax Haven Utilization: Evidence From Australian Firm. Journal of International Accounting, Auditing and Taxation, 22(1), 12–26.
Wang, S., Wang, J., Yang, F., Wang, J., & Li, J. (2018). Consumer familiarity, ambiguity tolerance, and purchase behavior toward remanufactured products: The implications for remanufacturers. Business Strategy and the Environment, 27(8), 1741–1750.
Xu, J., & Wang, B. (2018). Intellectual Capital , Financial Performance and Companies ’ Sustainable Growth : Evidence from the Korean Manufacturing Industry. https://doi.org/10.3390/su10124651
Yang, J., Zheng, Y., Gou, X., Pu, K., Chen, Z., Guo, Q., Ji, R., Wang, H., Wang, Y., & Zhou, Y. (2020). Prevalence of comorbidities and its effects in coronavirus disease 2019 patients: A systematic review and meta-analysis. International Journal of Infectious Diseases, 94, 91–95. https://doi.org/10.1016/j.ijid.2020.03.017
Barker, & Maguire. (2017). Experts by Experience: Peer Support and its Use with the Homeless. Community Ment Health.
Baroroh, N., Malik, S., & Jati, K. W. (2021). The role of profitability in moderating the factors affecting transfer pricing. Accounting, 7(5), 1203–1210. https://doi.org/10.5267/j.ac.2021.2.018
Bartelsman, E. J., & Beetsma, R. M. W. J. (2003). Why pay more? Corporate tax avoidance through transfer pricing in OECD countries. Journal of Public Economics, 87(9–10), 2225–2252. https://doi.org/10.1016/S0047-2727(02)00018-X
Bazile, D., Pulvento, C., Verniau, A., Al-Nusairi, M. S., Ba, D., Breidy, J., Hassan, L., Mohammed, M. I., Mambetov, O., Otambekova, M., Sepahvand, N. A., Shams, A., Souici, D., Miri, K., & Padulosi, S. (2016). Worldwide evaluations of quinoa: Preliminary results from post international year of quinoa FAO projects in nine countries. Frontiers in Plant Science, 7(June). https://doi.org/10.3389/fpls.2016.00850
Bernard. (2006). Research Methods in Anthropology: Qualitative and Quantitative Approaches. Altamira Press.
Borge, M. Z., & Byberg, K. (2018). The tightness of country-specific income shifting regulation and multinationals’ transfer pricing: an empirical study of European multinational corporations and their …. https://openaccess.nhh.no/nhh-xmlui/handle/11250/2585905%0Ahttps://openaccess.nhh.no/nhh-xmlui/bitstream/handle/11250/2585905/masterthesis.PDF?sequence=1
Brock, G., & Pogge, T. (2014). Global tax justice and global justice. Moral Philosophy and Politics, 1(1), 1–15. https://doi.org/10.1515/mopp-2014-0999
Chan, K. H., Lo, A. W. ., & Mo, P. (2019). An Empirical Analysis Of The Chane In Tax Audit Focus On International Transfer Pricing. Journal Of International Accounting, Auditing and Taxation.
Davies, S. C., Winpenny, E., Ball, S., Fowler, T., Rubin, J., & Nolte, E. (2014). For debate: A new wave in public health improvement. The Lancet, 384(9957), 1889–1895. https://doi.org/10.1016/S0140-6736(13)62341-7
Ginting, D. B., Triadiarti, Y., & Purba, E. L. (2020). Pengaruh Profitabilitas, Pajak, Mekanisme Bonus, Kepemilikan Asing, Debt Covenant Dan Intangible Assets Terhadap Transfer Pricing (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di Bei Tahun 2015 – 2017). JAKPI - Jurnal Akuntansi, Keuangan & Perpajakan Indonesia, 7(2), 32. https://doi.org/10.24114/jakpi.v7i2.18155
Guan, W., Liang, W., Zhao, Y., Liang, H., Chen, Z., Li, Y., Liu, X., Chen, R., Tang, C., Wang, T., Ou, C., Li, L., Chen, P., Sang, L., Wang, W., Li, J., Li, C., Ou, L., Cheng, B., … He, J. (2020). Comorbidity and its impact on 1590 patients with COVID-19 in China: a nationwide analysis. The European Respiratory Journal, 55(5), 640. https://doi.org/10.1183/13993003.00547-2020
Kananto, S. (2019). The Influences of Tax, Bonus Mechanism, Leverage and Company Size Through Company Decision on Transfer Pricing. 73(Aicar 2018), 207–212. https://doi.org/10.2991/aicar-18.2019.45
Nazihah, Azwardi, & Fuadah. (2019). The Effect Of Tax, Tunneling Incentive, Bonus Mechanisms, And Firm Size On Transfer Pricing. Journal of Accounting, Finance and Auditing Studies.
Nugroho, A. D., & Kunartinah. (2012). ANALISIS PENGARUH KOMPENSASI DAN PENGEMBANGAN KARIER TERHADAP KEPUASAN KERJA DENGAN MEDIASI MOTIVASI KERJA (Studi pada PNS di Sekretariat Daerah Kabupaten Pekalongan). Jurnal Bisnis Dan Ekonomi (JBE), 19(2), 153–169.
Rego, & Wilson. (2012). Equity Risk Incentives and Corporate Tax Aggressiveness. Journal of Accounting Research.
Richardson, S., Hirsch, J. S., Narasimhan, M., Crawford, J. M., McGinn, T., Davidson, K. W., Barnaby, D. P., Becker, L. B., Chelico, J. D., Cohen, S. L., Cookingham, J., Coppa, K., Diefenbach, M. A., Dominello, A. J., Duer-Hefele, J., Falzon, L., Gitlin, J., Hajizadeh, N., Harvin, T. G., … Zanos, T. P. (2020). Presenting Characteristics, Comorbidities, and Outcomes Among 5700 Patients Hospitalized With COVID-19 in the New York City Area. JAMA, 323(20), 2052–2059. https://doi.org/10.1001/JAMA.2020.6775
Richardson, T., Elliott, P., & Roberts, R. (2013). The relationship between personal unsecured debt and mental and physical health: A systematic review and meta-analysis. Clinical Psychology Review, 33(8), 1148–1162. https://doi.org/10.1016/j.cpr.2013.08.009
Ross L. Watts, & Jerold L. Zimmerman. (1990). Positive Accounting Theory: A Ten Year Perspective. The Accounting Review, 65(1), 131–156. https://www.jstor.org/stable/247880
Scott. (2011). Financial Accounting Theory.
Setyadi, R., & Prabowo, H. N. (2021). Risk Management Analysis of Bus Transportation Application Using Cobit 4.1. JURTEKSI (Jurnal Teknologi Dan Sistem Informasi), 7(2), 203–212. https://doi.org/10.33330/jurteksi.v7i2.1046
Sikka, P., & Willmott, H. (2010). The dark side of transfer pricing: Its role in tax avoidance and wealth retentiveness. Critical Perspectives on Accounting, 21(4), 342–356. https://doi.org/10.1016/j.cpa.2010.02.004
Solikhah, B., & Maulina, U. (2021). Factors influencing environment disclosure quality and the moderating role of corporate governance. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1876543
Sugiyono. (2017). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. Bandung : Alfabeta, CV.
Susanti, A., & Firmansyah, A. (2018). Determinants of Transfer Pricing Decisions in Indonesia Manufacturing Companies. Jurnal Akuntansi Dan Auditing Indonesia, 22(2), 695–709. https://www.neliti.com/id/publications/136376/analisis-pengaruh-rasio-keuangan-terhadap-perubahan-laba
Taylor, & Richardson. (2012). The determinants of Thinly Capitalized Tax Avoidance Structure: Evidence From Australian Firmg. Journal Of International Accounting, Auditing and Taxation.
Taylor, Richardson, & Ross. (2013). The Determinant Of Tax Haven Utilization: Evidence From Australian Firm. Journal of International Accounting, Auditing and Taxation, 22(1), 12–26.
Wang, S., Wang, J., Yang, F., Wang, J., & Li, J. (2018). Consumer familiarity, ambiguity tolerance, and purchase behavior toward remanufactured products: The implications for remanufacturers. Business Strategy and the Environment, 27(8), 1741–1750.
Xu, J., & Wang, B. (2018). Intellectual Capital , Financial Performance and Companies ’ Sustainable Growth : Evidence from the Korean Manufacturing Industry. https://doi.org/10.3390/su10124651
Yang, J., Zheng, Y., Gou, X., Pu, K., Chen, Z., Guo, Q., Ji, R., Wang, H., Wang, Y., & Zhou, Y. (2020). Prevalence of comorbidities and its effects in coronavirus disease 2019 patients: A systematic review and meta-analysis. International Journal of Infectious Diseases, 94, 91–95. https://doi.org/10.1016/j.ijid.2020.03.017