Tax Avoidance with Maqasid Syariah: Empirical Insights on Derivatives, Debt Shifting, Transfer Pricing, and Financial Distress

Vidiyanna Rizal Putri, Mohd Hadli Shah Mohamad Yunus, Nor Balkish Zakaria (), Meliza Putriyanti Zifi, Istianingsih Sastrodiharjo and Rosiyana Dewi
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Vidiyanna Rizal Putri: Accounting Department, STIE Indonesia Banking School, Jakarta 12730, Indonesia
Mohd Hadli Shah Mohamad Yunus: Institute of Professional Studies, Universiti Poly-Tech Malaysia, Kuala Lumpur 56100, Malaysia
Nor Balkish Zakaria: Accounting Research Institute, Universiti Teknologi MARA, Shah Alam 40450, Malaysia
Meliza Putriyanti Zifi: Politeknik Caltex, Kota Pekanbaru 28265, Indonesia
Istianingsih Sastrodiharjo: Faculty of Economics and Business, Universitas Bhayangkara Jakarta Raya, Jakarta 12550, Indonesia
Rosiyana Dewi: Fakultas Ekonomi dan Bisnis, Universitas Trisakti, Jakarta 11440, Indonesia

JRFM, 2024, vol. 17, issue 11, 1-17

Abstract: This study analyzes and investigates how financial factors, namely, derivatives, debt shifting, and transfer pricing, influence tax avoidance, with financial distress as an interaction variable, within the framework of stakeholder theory and positive accounting theory. Adding more uniqueness, this study injected the Maqasid Syariah elements into the framework. Conventional banks and non-bank institutions listed on the Indonesia Stock Exchange (IDX) between 2017 and 2022 were selected, comprising 414 final company-year observations. The study utilized E-Views software for data processing. The findings indicate that debt shifting negatively impacts tax avoidance, while derivatives have no significant influence. Transfer pricing positively impacts tax avoidance. Financial distress does not moderate the relationship between these financial practices and tax avoidance. From an Islamic perspective, practices such as transfer pricing and debt shifting, when used to avoid tax, contradict the principles of Maqasid Syariah, which emphasize fairness, wealth distribution, and societal welfare.

Keywords: tax avoidance; derivatives; debt shifting; transfer pricing; financial distress (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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