Transfer pricing in Indonesia: Do managers still utilize it as an effective strategy?

Nadifa Vicri Larasati and Dianwicaksih Arieftiara
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Nadifa Vicri Larasati: Faculty of Economics and Business, Universitas Pembangunan Nasional Veteran Jakarta, Pondok Labu, South Jakarta, 12450, DKI Jakarta, Indonesia.
Dianwicaksih Arieftiara: Associate Professor, Faculty of Economics and Business, Universitas Pembangunan Nasional Veteran Jakarta, Pondok Labu, South Jakarta, 12450, DKI Jakarta, Indonesia

International Journal of Research in Business and Social Science (2147-4478), 2023, vol. 12, issue 7, 48-60

Abstract: This research aims to find out and analyze the effect of the bonus mechanism, tunneling incentive, and exchange rate on company decisions to perform transfer pricing practices in 35 manufacturing and mining sector companies listed on the Indonesia Stock Exchange for the 2018–2020 period. The population of this research is used in the manufacturing and mining sectors listed on the Indonesia Stock Exchange (IDX). This research is a type of quantitative research using secondary data in the form of the company’s annual report and financial statement. The Random Effect Model (REM) with panel data regression was used in this study using STATA version 16. Based on the test results and analysis, it can be concluded that the bonus mechanism has a significant positive effect on transfer pricing, the exchange rate has a significant negative effect on transfer pricing, and the tunneling incentive has no effect on transfer pricing. Key Words:Bonus Mechanism, Tunneling Incentive, Exchange Rate, Transfer Pricing

Date: 2023
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