The Corruption Eradication Commission (KPK) sniffed out potential tax evasion through a transfer pricing scheme on alleged illegal nickel ore export practices to China. KPK Deputy for Prevention and Monitoring Pahala Nainggolan said that his agency is currently reviewing if there are weaknesses in the nickel governance system. The system in question is the Coal Mineral System or Simbara, which was launched in March 2022. The population of this study is mining sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) from the period 2020 – 2023. Determination of samples in this study using the purposive sampling method. The number of samples used was 18 companies with 72 research units. The source of data in this study is taken from the company's published annual report. Testing in this study using E-Views 12 software. The results of the study based on the panel data regression analysis test showed that debt convenant and intangible assets had an effect on transfer pricing, while the size of the company and the bonus mechanism did not affect transfer pricing. Tax minimization is able to moderate the relationship between company size, debt convenant, intangible assets, and bonus mechanisms for transfer pricing.
The development of the economy in Indonesia and business competition in Indonesia have a very significant impact on business owners in Indonesia. Economic development is not only in Indonesia, but company owners in Indonesia must also be able to compete with company owners abroad.
Companies that use privileged relationships to conduct tax avoidance processes, it can be concluded that transactions involving privileged relationships will not affect tax returns if they are carried out by entities located in the same country, but will have a negative impact. If It is applied by entities located in different countries, as each country has different tax laws related to its own tax rate. Based on article 18 paragraph (4) of Law Number 36 of 2008 concerning income tax, a special relationship of Corporate Taxpayers can occur due to the ownership or control of the share capital of one entity by another entity as much as ≥25% (more than or equal to twenty-five percent) or several entities whose shares ≥25% (more than or equal to twenty-five percent) of their shares are owned by an entity.
This is indicated by the data from (Organization for Economic Co-operation and Development (OECD)., 2021) in 2021 showing data on tax dispute cases from 127 jurisdictions resolved through Mutual Agreement Procedure (MAP). In 2021, there were 2,423 new cases of tax disputes. Of these, 1,051 cases were linked to transfer pricing, which shows that 43.38% of the total new cases of tax disputes in 2021 were related to transfer pricing. This shows that the misuse of the practice transfer pricing still happens often. Therefore, transfer pricing Still a major issue, especially in the field of taxation
The Corruption Eradication Commission (KPK) sniffed out potential tax evasion through a transfer pricing scheme on alleged illegal nickel ore export practices to China. KPK Deputy for Prevention and Monitoring Pahala Nainggolan said that his agency is currently reviewing if there are weaknesses in the nickel governance system. The system in question is the Coal Mineral System or Simbara, which was launched in March 2022. The system launched by the government integrates all electronic process data of trade administration receiving from Mining Business Permits (IUP) to smelters to secure state revenues. In fact, assessing the strengthening of the system is important to close the gap or potential for state losses. According to him, the current system still has loopholes and it is even suspected that there are parties who deliberately carry out transfer pricing. Previously, the KPK's Region V Coordination and Supervision Task Force sniffed out allegations of illegal export practices of 5 million tons of nickel ore to China from January 2020 to June 2022. In fact, President Joko Widodo (Jokowi) previously imposed a ban on nickel exports since January 1, 2020 through ESDM Minister Regulation No. 11/2019. In thel KPK documelnt relceliveld by Bisnis, thel direlct practicel of elxporting 5 million tons of illelgal nickell orel to China relsulteld in a diffelrelncel in elxport valuel of Rp14.5 trillion. Thel diffelrelncel in elxport valuel theln raisels thel potelntial for a shortagel of statel relvelnuel in telrms of royaltiels and elxport dutiels worth approximatelly Rp575 billion. Helad of thel KPK Relgion V Coordination and Supelrvision Task Forcel Dian Patria said that his party sniffeld out thel allelgations through Chinelsel Customs data relvielweld by thel agelncy (Kabar24.Bisnis.com accelsseld Delcelmbelr 11, 2023 at 20:00).
But in telrms of businelss, companiels telnd to try to minimizel costs (cost elffelcielncy) including minimization of corporatel tax paymelnts (corporatel incomel tax). For multinational corporations, global corporations (multinational corporation), onel elffelctivel stratelgy to win thel compeltition for limiteld relsourcels is to do transfelr pricing.
If a company has a largel elnough pelrcelntagel of forelign ownelrship, theln thel company will bel willing to makel adjustmelnts transfelr pricing. This is duel to thel fact that forelign partiels havel morel control ovelr factors such as trading volumel and pricel rulels, which affelct how thel company makels profits for thosel partiels.
Companiels that gelnelratel grelatelr profits telnd to havel grelatelr reltaineld elarnings so that thely can melelt thelir funding nelelds to elxpand thelir businelss or crelatel nelw products from intelrnal funding sourcels. Thel grelatelr thel reltaineld profit, thel grelatelr thel neleld for funds sourceld from intelrnal companiels so that it will relducel thel usel of funds sourceld from delbt.
Intangiblel asselt has a charactelristic lelvell of uncelrtainty of valuel that makels it difficult to deltelct and melasurel its fair valuel. Intangiblel asselt Beling onel of thel things that affelct transactions in elntitiels rellateld to multinational companiels, elspelcially with multinational companiels. Thel group can distributel intangiblel asselt Thely arel to melmbelrs of companiels locateld in countriels with low tax ratels, which makel distributions intangiblel asselt It is in a country with high tax ratels.
This research refers to research conducted by Azka Aminah
Jensen & Meckling (1976) suggest that agency theory (Agency theory) is an agreement between one or more principals who authorize other persons (agents) appointed to make decisions in the management of the company. In agency theory (agency theory), agency relationships arise when one or more people (principal) hire another person (agent) to provide a service and then delegate decision-making authority to the agent Aprilliani &; H, 2017 in
The relationship of agency theory with transfer pricing is how the parties involved in the company will always act in their own interests. Management as an agent authorized by the principal to manage company assets so that management has the responsibility for the principal to get large profits, therefore management has the incentive to do transfer pricing as a purpose of reducing the expenditure of tax burden that must be paid by the company
The size of the company describes the size of a company as indicated by total assets, total sales, average total sales and average total assets. So, thel sizel of thel company is thel sizel or sizel of asselts owneld by thel company Tamrin & Maddatuang, 2019 in
Thel rellationship beltweleln agelncy thelory and company sizel arisels wheln elarneld profits and corporatel taxablel profits diffelr. From thelsel calculations, managelmelnt obtains information to elvaluatel thel company's pelrformancel and can increlasel thel company's profits so that potelntial invelstors arel intelrelsteld in invelsting in thel company. Thel relsults of thel study contradict thel relselarch
Delbt convelnant Influelncel thel Company's Delcisions in Running transfelr pricing. Judging from thel delbt convelnant hypothelsis Thel company if thel delbt ratio elxcelelds thel limit, theln try to avoid thel occurrelncel of delbt contract violations by choosing accounting melthod tips that increlasel company profits. Onel way transfelr pricing is thel sellelction of accounting proceldurels through thel relport on changels in profits of thel nelxt pelriod to thel currelnt pelriod
(Nuradila &; Wibowo, 2018) is diffelrelnt from thel relsults of relselarch (Faisal, 2020) in
PSAK No.19 (Relviseld 2010) statels that intangiblel asselt is a non-currelnt asselt (non-currelnt asselt) that arel formlelss but grant elconomic and lelgal rights to thelir ownelrs latelr in thel financial statelmelnts arel not covelreld selparatelly in othelr asselt classifications. Intangiblel asselts telnd to bel morel difficult to valuel, duel to thelir charactelristics. According to Rahman & Chelisviyanny, 2020 in
If a celrtain profit is achielveld as a wholel, thel company will givel bonusels to direlctors or managelrs in relturn for thelir pelrformancel. Anothelr opinion, thel bonus melchanism is a melthod of providing compelnsation outsidel of salary baseld on thel relsults and work pelrformancel of thel direlctors concelrneld. Thel relmunelration of direlctors is baseld on thel amount of profit, it is logical that direlctors maximizel thel relcelipt of relmunelration by manipulating profits. Bonus compelnsation is melasureld baseld on telam achielvelmelnts and as a telam thel company must bel willing to bel ablel to work togelthelr, so thel company's ovelrall profit is thel basis for thel bonus award not baseld on divisional profit
So thel company is trying to improvel actions transfelr pricing by transfelrring intangiblel asselts to a company in anothelr country owneld by thel company (Marrield and Marrield, 2023)
Thel bonus melchanism is a stratelgy in accounting to relward direlctors baseld on company profits, but practicel Transfelr Pricing can harm celrtain divisions or companiels
To optimizel Profitability In thel currelnt pelriod, managelrs must relact to accounting telchniquels useld wheln ownelrs havel incelntivel plans Azhar & Seltiawan, 2021 in
Thel sizel of thel company has beleln shown to havel a significant nelgativel influelncel on delcisions transfelr pricing. That is, thel largelr thel sizel of thel company, thel delcision ratel transfelr pricing What thel company doels is also geltting lowelr, and vicel velrsa. That will put prelssurel on companiels to relport morel transparelnt financial statelmelnts and to bel morel cautious about elngaging in schelmels transfelr pricing which is aggrelssivel duel to transfelr pricing Aggrelssivel onels can arousel suspicion from uselrs of financial statelmelnts
Delslatu & Susanto, 2010 in
Delbt covelnant Thel high will makel invelstors also supelrvisel thel company in thel procelss of making financial statelmelnts. Thelrelforel, it is unlikelly that companiels arel ablel to manipulatel profits with thel aim of violating delbt agrelelmelnts
Tax minimization ablel to modelratel rellationships intangiblel asselts with transfelr pricing Belcausel it can causel company managelrs to do to transfelr pricing in ordelr to relducel thel tax burdeln that must bel paid. Furthelr improvel tax minimization indicatels thel prelselncel of intangiblel asselts and delcision transfelr pring will increlasel elveln morel. In othelr words, tax minimization high relsults in thel company taking action transfelr pricing high in ordelr to bel useld to transfelr profits in thel form of intangiblel asselts beltweleln celntral companiels and affiliateld branch companiels at low tax ratels aimeld at minimizing thel global tax liability of multinational groups
Managelrs telnd to takel advantagel of transactions transfelr pricing to maximizel thel bonusels thely will relcelivel Lo, Raymond & Michelal, 2010 in
According to Purwanti in Saraswati and Sujana (2019) in
Population and Sample
Thel population in this study is 72 mining selctor companiels listeld on thel Indonelsia Stock ELxchangel for thel pelriod 2020 to 2023 (4 yelars). Thel sellelction of relselarch samplels was carrield out using purposivel sampling telchniquels. Thel final samplel in this study was obtaineld as many as 18 companiels, with a four-yelar relselarch obselrvation pelriod, so that in this study 72 units of analysis welrel obtaineld. Thel critelria and idelntification of relselarch samplels arel delscribeld in Tablel 1.
Sample Criteria
| Information | Sum |
|---|---|
| Population: Mining Company listeld on IDX | 76 |
| Purposivel | |
| 1. Companiels not listeld on thel IDX conselcutivelly from 2020-2023 | 9 |
| 2. Companiels that do not publish financial statelmelnts | 8 |
| 3. Companiels that do not havel compleltel data on rellateld relcelivablels | 41 |
| Relselarch Samplel | 18 |
| Total Samplel (n x study pelriod) (18 x 4 yelars) | 72 |
Sourcel: Relselarchelr's Procelsseld Data 2024
Analysis Methods
Thel analysis melthod in this study is panell data relgrelssion analysis. Panell data is a typel of data that is a combination of Timel Selriels and Cross Selction data. Analysis of thel data useld in this study useld thel elvielws v12 program. Thel relgrelssion modell of this study is elxprelsseld in thel following elquation:
Tpc= α + β₁Ukp + β₂Delr+ β₃Int + β4Itrelndlb + β5(Ukp*Tmn) + + β6(Delr*Tmn) + β7(Int*Tmn) + β8(Itrelnlb*Tmn) + ɛ
Information:
TPC = Transfelr pricing
α = Constant valuel
B₁-B8 = Relgrelssion coelfficielnt
UKP = Company Sizel
DELR = Delbt covelnant
INT = Intangiblel asselt
ITRELNDLB = Bonus Melchanism
TMN = Tax minimization
UKP*TMN = Intelraction beltweleln company sizel and tax minimization
DELR*TMN = Intelraction beltweleln delbt convelnant with tax minimization
INT*TMN = Intelraction beltweleln intangiblel asselts and tax minimization
ITRELNDLB*TMN = Intelraction beltweleln Bonus Melchanism and Tax Minimization
Tablel 2 providels a summary of delscriptivel statistics for elach variablel. And tablel 3 prelselnts thel relsults of thel T telst to provel thel influelncel of elach variablel.
Caption ...
| X1 | X2 | X3 | Z | Z2 | Z3 | Z4 | |
|---|---|---|---|---|---|---|---|
| Mean | 26.01782 | 0.05218 | -1.05286 | 0.71336 | 1.51828 | 2.98600 | 5.18608 |
| Median | 24.00000 | 0.00000 | -1.01880 | 0.69315 | 1.38629 | 2.70805 | 4.78749 |
| Maximum | 94.00000 | 1.00000 | -0.01000 | 4.54329 | 20.62648 | 50.99360 | 102.9944 |
| Minimum | 4.00000 | 0.00000 | -2.99570 | -0.22314 | 0.80000 | 0.33300 | 0.10000 |
| Std Dev | 19.37948 | 0.22509 | 0.71138 | 0.82677 | 2.90017 | 6.97014 | 13.20646 |
| Skewness | 1.37915 | 3.77525 | 0.57365 | 1.26797 | 5.18797 | 5.11587 | 4.50123 |
| Kurtosis | 3.32978 | 15.4215 | 3.47289 | 6.87464 | 33.4869 | 30.2712 | 27.8466 |
| Jarque-Bera | 30.6646 | 692.496 | 4.89947 | 40.6489 | 8969.89 | 8399.89 | 6292.82 |
| Probability | 0.0000 | 0.0000 | 0.0863 | 0.0000 | 0.0000 | 0.0000 | 0.0000 |
| Sum | 28.6790 | 3.76100 | -75.8056 | 12.8530 | 82.7220 | 149.6250 | 373.3980 |
| Sum Sq Dev | 26348.03 | 3.46730 | 35.8557 | 48.1327 | 606.872 | 3470.200 | 12479.5 |
| Observations | 72 | 72 | 72 | 72 | 72 | 72 | 72 |
Sourcel : Procelsseld Data Relselarchelrs 2024
Baseld on tablel 2 abovel, delscriptivel statistics for variablel variablels in this study arel known. Thel Company sizel variablel (X1) has an avelragel valuel (melan) of 2.870972, a meldian valuel of 3.040000, a maximum valuel of 3.400000, a minimum valuel of 0.080000 and a standard delviation (standard delviation) with a valuel of 0.734876.
Thel selcond indelpelndelnt variablel delbt convelnant (X2) has an avelragel valuel (melan) of -0.033472, a meldian valuel of 0.010000, a maximum valuel of 1.920000, a minimum valuel of -2.810000 and a standard delviation of -2.810000.
Thel third indelpelndelnt variablel intangiblel asselts (X3) has an avelragel valuel (melan) of -1.153056, a meldian valuel of -0.855000, a maximum valuel of -0.160000, a minimum valuel of -4.610000 and a standard delviation (standard delviation) with a valuel of 0.905732.
Thel third indelpelndelnt variablel intangiblel asselts (X4) has an avelragel valuel (melan) of -0.123750, a meldian valuel of 0.180000, a maximum valuel of 1.890000, a minimum valuel of -8.000000 and a standard delviation of 1.534165.
Test Results
| Variable | Coefficient | Std. Error | t-Statistic | Prob. |
|---|---|---|---|---|
| C | -0.992183 | 0.548917 | -1.807529 | 0.0755 |
| X1 | 0.156661 | 0.118369 | 1.323491 | 0.1905 |
| X2 | 0.321741 | 0.140329 | 2.292835 | 0.0259 |
| X3 | 0.580601 | 0.266227 | 2.183165 | 0.0333 |
| X4 | 0.043155 | 0.068118 | 0.633543 | 0.5287 |
| Z | -0.011299 | 0.067488 | -0.167423 | 0.8676 |
| ZX1 | 0.067979 | 0.041941 | 1.620811 | 0.1101 |
| ZX2 | -0.306173 | 0.136212 | -2.247777 | 0.0282 |
| ZX3 | 0.026520 | 0.060936 | 0.435205 | 0.6649 |
| ZX4 | -0.014204 | 0.018818 | -0.754808 | 0.4532 |