Unmasking Tax Avoidance: How Multinational Corporations in Indonesia's Raw Materials Sector Exploit Loopholes (2018-2022)
Authors:
Koenta Koerniawan
(Telkom University, Indonesia)
,
Ferdio Ghifary Fidhien
(Telkom University, Indonesia)
,
Hosam Alden Riyadh
(Telkom University, Bandung, Indonesia.)
,
Afidhiena Raisyan Nisa
(Merdeka University, Malang, Indonesia)
,
Alfido Fiqri Arsy Adhiem
(Merdeka University, Malang, Indonesia)
Abstract
This study delves deep into the tactics employed by multinational corporations (MNCs) to circumvent Indonesia's tax laws and minimize their tax liabilities within the raw materials sector. Employing panel data regression analysis on a dataset comprising 40 observations from 8 companies over five years (2018-2022). Transfer pricing, profitability, capital intensity, and thin capitalization have a significant influence on tax avoidance. Therefore, stronger transfer pricing regulations and a global minimum corporate tax are crucial to combat base erosion and profit shifting. Increased transparency and accountability in multinational corporations' financial reporting in Indonesia are also essential.
Keywords: Tax Avoidance, Transfer Pricing, Profitability, Capital Intensity, Thin Capitalization
How to Cite:
Koerniawan, K., Fidhien, F. G., Riyadh, H. A., Nisa, A. R. & Adhiem, A. F., (2025) “Unmasking Tax Avoidance: How Multinational Corporations in Indonesia's Raw Materials Sector Exploit Loopholes (2018-2022)”, Australasian Accounting, Business and Finance Journal 19(5), 166–185. doi: https://doi.org/10.14453/aabfj.v19i5.10
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