The Effect of Transfer Pricing, Thin Capitalization, and Capital Intensity on Tax Aggressiveness in Industrial Companies in Indonesia for the 2020-2024 Period
Suhartini1, Ni Made Suwitri Parwati2

Accounting Department, Faculty of Economics and Business, Tadulako University

Abstract

Tax aggressiveness is one of the company^s strategies in minimizing tax burdens. This practice can lead to issues with tax compliance and impact state revenue. This study aims to examine the effect of Transfer Pricing, Thin Capitalization, and Capital Intensity on Tax Aggressiveness in Industrial Companies in Indonesia for the 2020-2024 period. Transfer Pricing is measured using the TP (Related Party Transactions) indicator, Thin Capitalization is measured using the DER (Debt-to-Equity Ratio) indicator, Capital Intensity is measured using the CAP (Capital Intensity) indicator, while Tax Aggressiveness is measured using ETR (Effective Tax Rate). This study uses a quantitative approach with secondary data sources. The research population consists of Indonesia Stock Exchange (IDX) during the 2020-2024 period, with a total population of 68 companies. The sampling technique used was purposive sampling with a total sample of 12 companies and 60 observation data points. The data analysis technique was conducted using the PLS-SEM (Partial Least Square) approach and processed with the WarpPls 8.0 application. The results of the study indicate that Transfer Pricing and Thin Capitalization have a negative and significant effect on Tax Aggressiveness, while Capital Intensity has a positive and significant effect on Tax Aggressiveness.

Keywords: Transfer Pricing, Thin Capitalization, Capital Intensity, Tax aggressiveness.

Topic: Accounting and Auditing