Leverage, Profitability and Tax Avoidance: Transfer Pricing as a Moderating Variable

Abstract

This study analyzes the impact of leverage and profitability on tax avoidance, using transfer pricing as a moderating variable. The study focuses on manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2021-2023 period (3 years). Data were collected from the company's financial statements and analyzed using the Eviews application. The determination of the sample for this study was using the Purposive Sampling method and the analysis used panel data with the multiple regression method. The results of the study indicate that leverage has no effect on tax avoidance, profitability has a negative effect on tax avoidance, transfer pricing is able to positively moderate the effect of leverage and profitability on tax avoidance. The novelty of this study lies in the use of transfer pricing as a moderating variable in the relationship between leverage, profitability, and tax avoidance. This study provides a managerial contribution by identifying factors that influence tax avoidance and the role of transfer pricing in strengthening or weakening this influence. The results of this study are expected to be a reference for company management in formulating more effective and efficient financial policies in managing the company's tax burden.