Factors That Influence Companies To Make Transfer Pricing Decisions

Abstract

Transfer Pricing is a company's policy in determining the price of a transaction between parties who have a special relationship. The aim of this research is to find out whether taxes, bonus plans, tunneling incentives, firm size and debt covenants influence the decisions of mining sector companies listed on the Indonesia Stock Exchange in carrying out transfer pricing transactions. Transfer pricing is a transaction of goods or services between divisions in a business group at an unreasonable price, either by increasing (mark up) or lowering the price (mark down), mostly carried out by global companies (Multi-National Enterprise). This research uses a quantitative descriptive approach. The sample used in this research was mining sector companies registered on the IDX in 2017-2022, totaling 41 companies using the purposive sampling method. The analysis technique used in this research is logistic regression. The results of this research show that tunneling incentives, firm size, and debt covenants influence the company's decision to carry out transfer pricing. Meanwhile, taxes and bonus plans have no influence on the company's decision to carry out transfer pricing. The coefficient of determination is 0.470, which means that 47% of transfer pricing transactions are influenced by this variable, while the rest is explained by other variables. These results show that there are still many variables outside research that can explain transfer pricing transactions