Thin Capitalization Determinants in Manufacturing Companies in Indonesia

Septian Adi Hananto(1*), Nurmadi Harsa Sumarta(2), Edy Supriyono(3)

(1) Universitas Sebelas Maret
(2) Universitas Sebelas Maret Surakarta
(3) Universitas Sebelas Maret Surakarta
(*) Corresponding Author

Abstract

This study aims to analyze the determinants of thin capitalization practices on manufacturing companies in Indonesia. Moreover, this study focuses on the manufacturing sector which ranks as the second largest recipient of foreign debt. The population of this study consisted of all manufacturing companies which had listed on the Indonesia Stock Exchange from 2016 to 2019. Furthermore, the purposive sampling technique was used as a sampling technique and it was obtained 308 samples. The hypothesis analysis technique in this study used the Ordinary Least Square (OLS) method. The results show that tax haven utilization and significant foreign ownership has a positive effect on the practice of thin capitalization. Meanwhile, foreign directors has negative effect on the practice of thin capitalization. However, this study cannot prove the effect of multinationality on the practice of thin capitalization.

Keywords: thin capitalization, multinationality, tax haven utilization, significant foreign ownership, foreign directors.

Full Text:

PDF

References

Almutairi, A. R. (2020). Foreign directors and corporate governance in Islamic banks. Journal of Islamic Accounting and Business Research, 11(4), 765–791.

Alvita, F., & Khairunnisa, P. (2019). Analisis Pengaruh Kebijakan Dividen, Keputusan Investasi Dan Keputusan Pendanaan Terhadap Nilai Perusahaan. Jurnal ASET (Akuntansi Riset), 11(1), 108–122.

Amri, A. B., Prima, B., & Prasetyo, H. (2019). Bentoel Didera Rugi Menahun Hingga Tudingan Memanfaatkan Celah Pajak dan Cukai. Insight Kontan. https://insight.kontan.co.id/news/bentoel-didera-rugi-menahun-hingga-tudingan-memanfaatkan-celah-pajak-dan-cukai

Christiana, D., & Martani, D. (2015). Determinan Praktik Thin Capitalization Listed Companies di Indonesia 2010-2013. Konferensi Regional Akuntansi III (KRA III).

Darussalam, & Kristiaji, B. B. (2015). Telaah Konstruktif Debt to Equity Ratio di Indonesia. Ikatan Akuntan Indonesia (IAI), LXXXI(4), 1–10.

Dewi, L. G. K. (2017). Pengaruh Diversitas Dewan Komisaris dan Direksi Pada Tax Avoidance. E-Jurnal Akuntansi Universitas Udayana, 18(1), 763–789.

Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. The Academy of Management Review, 14(1), 57–74.

Gravelle, J. G. (2009). Tax Havens: International Tax Avoidance and Evasion. National Tax Journal, 62(4).

Gravelle, J. G. (2015). Tax havens: International tax avoidance and evasion. Congressional Research Service Report, 7–5700.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.

Kinney, M., & Lawrence, J. (2000). An Analysis of the Relative U.S Tax Burden of U.S Corporation Having Substantial Foreign Ownership. National Tax Journal, 53(1), 9–22.

Kurniawan, A. M. (2015). Transfer Pricing untuk Kepentingan Pajak. Yogyakarta: Penerbit Andi.

Makagiansar, A. B. (2010). Analisis atas Transaksi Intercompany Loan (Thin Capitalization) sebagai Salah Satu Praktek Penghindaran Pajak : Studi Kasus pada PT. X. Tesis. Universitas Indonesia.

Malik, S. (2020). Pengaruh Beban Pajak, Mekanisme Bonus, dan Tunneling Incentive terhadap Keputusan Transfer Pricing dengan Profitabilitas sebagai Variabel Moderating. Skripsi. Universitas Negeri Semarang.

Nainggolan, C., & Sari, D. (2020). Kepentingan Asing, Aktivitas Internasional, dan Thin Capitalization: Pengaruh Terhadap Agresivitas Pajak di Indonesia. Jurnal Akuntansi Dan Bisnis, 19(2), 147.

Nugroho, A., & Suryarini, T. (2018). Determinant of Thin Capitalization in Multinational Companies in Indonesia. Journal of Accounting and Strategic Finance, 1(02), 69–78.

Nuraini, N. S., & Marsono. (2014). Analisis Faktor-Faktor Yang Mempengaruhi Thin Capitalization Pada Perusahaan Multinasional Di Indonesia. Diponegoro Journal of Accounting, 0(0), 652–660.

Reinganum, J. F., & Wilde, L. L. (1985). Income tax compliance in a principal-agent framework. Journal of Public Economics, 26(1), 1–18.

Salihu, I. A., Annuar, H. A., & Sheikh Obid, S. N. (2015). Foreign investors’ interests and corporate tax avoidance: Evidence from an emerging economy. Journal of Contemporary Accounting and Economics, 11(2), 138–147.

Sugiarto. (2009). Struktur Modal, Struktur Kepemilikan Perusahaan. Permasalahan Keagenan. Informasi Asimetri. Yogyakarta: Graha Ilmu.

Suh, J., Lee, H., & Lee, H. (2018). The Association between Foreign Directors and opportunistic Financial Reporting. Investment Management and Financial Innovations, 15(4), 98–112.

Supriadi, A. (2015). Hindari Pajak, 2000 Perusahaan Asing Sengaja Timbun Utang. CNN Indonesia. https://www.cnnindonesia.com/ekonomi/20150917154008-78-79395/hindari-pajak-2000-perusahaan-asing-sengaja-timbun-utang

Taylor, G., & Richardson, G. (2012). International Corporate Tax Avoidance Practices: Evidence from Australian Firms. International Journal of Accounting, 47(4), 469–496.

Taylor, G., & Richardson, G. (2013). The determinants of thinly capitalized tax avoidance structures: Evidence from Australian firms. Journal of International Accounting, Auditing and Taxation, 22(1), 12–25.

Waluyo, W., & Doktoralina, C. M. (2018). Factors affecting tax avoidance through thin capitalisation: Multinational enterprises in Indonesia. International Journal of Management and Business Research, 8(3), 210–216.

DOI: 10.23917/reaksi.v6i2.15073

Article Metrics

Abstract view(s): 572 time(s)
PDF: 539 time(s)

Refbacks

  • There are currently no refbacks.