Determinants of Transfer Pricing Aggressiveness of Consumer Goods Companies in Indonesia with Financial Performance as a Mediating Variable

Supriyadi SUPRIYADI; Tri   WIDYASTUTI; Darmansyah DARMANSYAH

doi:10.38142/ijesss.v6i4.1526

Authors

Supriyadi SUPRIYADI STAN Polytechnic of State Finance, Indonesia
Tri WIDYASTUTI Bhayangkara University of Greater Jakarta, Indonesia
Darmansyah DARMANSYAH Pancasila University, Indonesia

DOI:

https://doi.org/10.38142/ijesss.v6i4.1526

Keywords:

Financial Leverage, Firm Size, Intangible Assets, Average Effective Rate, Financial Performance

Abstract

Transfer Pricing Aggressiveness (TPA) is a strategy by multinational companies to shift profits to low-tax jurisdictions, which poses serious challenges for tax authorities in the context of Base Erosion and Profit Shifting (BEPS). Consumer goods companies in Indonesia are vulnerable to this practice due to characteristics such as leverage, company size, intangible assets, and the effective tax rate. This study aims to analyze the main determinants of TPA and explore the mediating role of financial performance in this relationship. The approach used is a mixed methods approach with an explanatory sequential design. Quantitative data were obtained from 126 financial reports of Indonesian consumer goods companies for the period 2016–2022 and analyzed using SEM-PLS. The results show that financial characteristics significantly influence TPA through financial performance as a mediator. Large and highly leveraged companies tend to manage TPA strategically, while the use of intangible assets is carried out more cautiously due to valuation and oversight risks. Financial performance serves as a signal to stakeholders and a legitimacy tool in the face of regulatory pressure. This research integrates various theoretical perspectives: Agency Theory, Resource-Based View, Institutional Theory, Tax Compliance Theory, and Legitimacy Theory. Qualitative analysis reveals regulatory challenges in Indonesia, particularly in oversight, compliance, and dispute resolution. This research provides empirical and conceptual contributions to understanding TPA strategies in developing countries and supports governance- and data-driven fiscal reforms.

Downloads

Download data is not yet available.

References

Creswell, J. W., & Clark, V. L. P. (2017). Designing and conducting mixed methods research. Sage publications

Cristea, A. D., & Nguyen, D. X. (2016). Transfer Pricing by multinational firms: New evidence from foreign firm ownerships. American Economic Journal: Economic Policy, 8(3), 170–202

Firmansyah, A., & Yunidar, A. (2020). Financial derivatives, financial Leverage, Intangible Assets, and Transfer Pricing Aggressiveness: evidence from indonesian companies. Jurnal Dinamika Akuntansi Dan Bisnis, 7(1), 1–14.

Gumelar, E. T., & Norita, N. (2014). Pengaruh Corporate Governance Terhadap Perilaku Oportunistik Manajerial Dan Kebijakan Dividen Serta Dampaknya Terhadap Nilai Perusahaan (Studi Kasus Pada Perusahaan Non Keuangan Di Indeks Kompas 100). EProceedings of Management, 1(3).

Irawan, F., & Ulinnuha, I. A. (2022). Transfer Pricing Aggressiveness in Indonesia: Multinationality, Tax Haven, and Intangible Assets. Jurnal Dinamika Akuntansi Dan Bisnis, 9(1), 1–18.

Jafri, H. E., & Mustikasari, E. (2018). Pengaruh Perencaan Pajak, Tunnneling Incentive dan Aset Tidak Berwujud Terhadap Perilaku Transfer Pricing pada Perusahaan Manufaktur yang Memiliki Hubungan Istimewa yang Terdaftar di Bursa Efek Indonesia Periode 2014-2016. Berkala Akuntansi Dan Keuangan Indonesia, 3(2), 63.

Klassen, K. J. (2017). Transfer Pricing: Strategies, practices, and tax minimization. Contemporary Accounting Research, 34(1), 455 493. https://doi.org/10.1111/1911 3846.12239

Merle, R., Al-Gamrh, B., & Ahsan, T. (2019). Tax havens and transfer pricing intensity: Evidence from the French CAC-40 listed firms. Cogent Business & Management, 6(1), 1647918.

Mulya, A. S. (2022). Analisis Faktor yang Memengaruhi Keputusan Agresivitas Transfer Pricing. Studi Akuntansi, Keuangan, Dan Manajemen, 2(1), 71–82.

Richardson, G., Taylor, G., & Lanis, R. (2013). Determinants of transfer pricing Aggressiveness: Empirical evidence from Australian firms Journal of Contemporary Accounting & Economics, 9(2), 136–150.

Ridwan, M., Arofah, A. D., Putri, A. P. R. Z., & Ilham, U. P. (2023). Analisis Faktor-Faktor Yang Mempengaruhi Transfer Pricing Pada Perusahaan Sektor Industri Di Indonesia. Jurnal Ekonomika Dan Bisnis.

Supriyadi, S., Widyastuti, T., & Darmansyah, D. (2024). Determination of financial performance and Transfer Pricing Aggressiveness: Analysis of sales growth, Leverage, Company Size and Intangible Assets (literature review). Educoretax, 4(10), 1194 1209.

Wahyudi, D. E., Sutrisno, T., & Rusydi, M. K. (2021). Determinants of Transfer Pricing Aggressiveness with the moderation of corporate governance in Indonesia and Malaysia. Journal of Economics, Business, & Accountancy Ventura, 24(1), 23–33.

Wulandari, I., & Pratiwi, A. P. (2023). Pengaruh Ukuran Perusahaan, Sales Growth, dan Transfer Pricing Terhadap Tax Avoidance. Journal of Islamic Accounting Competency, 3(2), 57–70.