Proceedings of the International Conference of Ethics on Business, Economics, and Social Science (ICEBESS 2018)

Foreign Related Parties Transactions as Tax Avoidance Strategy in Indonesia: The Role of Corporate Governance

Authors
Nuritomo Nuritomo, Sidharta Utama, Ancella A Hermawan
Corresponding Author
Nuritomo Nuritomo
Available Online April 2019.
DOI
10.2991/icebess-18.2019.15How to use a DOI?
Keywords
tax avoidance, tax expenses, related party transaction, marginal tax rate, corporate governance
Abstract

This study presents tax avoidance practice through foreign related party transaction and the effect of corporate governance on the relationship between the shareholder's tax expenses and foreign related party transaction. Different from other studies that use related party transaction entirely, this study uses a foreign related party transaction. Related party transaction will be beneficial only if it is done on the company with the different tax rate. If it is done in Indonesia that has a flat income tax rate, foreign related party transaction can be used to avoid tax. Using data from 301 listed companies in Indonesia, this study finds that tax avoidance in Indonesia is undertaken by increasing foreign related party transaction. The use of foreign related party transaction can tell more about tax avoidance strategy compared to related party transaction in totally. The related party transaction to a country with a lower tax rate can be one of tax avoidance strategy in Indonesia to get a tax benefit. This study also finds that corporate governance can weaken the effect of the shareholder's tax expenses on the related party transaction meaning to lower the tax avoidance practice through the mechanism of related foreign party transaction.

Copyright
© 2019, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

Volume Title
Proceedings of the International Conference of Ethics on Business, Economics, and Social Science (ICEBESS 2018)
Series
Advances in Social Science, Education and Humanities Research
Publication Date
April 2019
ISBN
10.2991/icebess-18.2019.15
ISSN
2352-5398
DOI
10.2991/icebess-18.2019.15How to use a DOI?
Copyright
© 2019, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Nuritomo Nuritomo
AU  - Sidharta Utama
AU  - Ancella A Hermawan
PY  - 2019/04
DA  - 2019/04
TI  - Foreign Related Parties Transactions as Tax Avoidance Strategy in Indonesia: The Role of Corporate Governance
BT  - Proceedings of the International Conference of Ethics on Business, Economics, and Social Science (ICEBESS 2018)
PB  - Atlantis Press
SP  - 86
EP  - 92
SN  - 2352-5398
UR  - https://doi.org/10.2991/icebess-18.2019.15
DO  - 10.2991/icebess-18.2019.15
ID  - Nuritomo2019/04
ER  -