Transfer Pricing, Political Connection, and Tax Avoidance: An Empirical Study on Energy Companies in Indonesia

Authors

DOI:

https://doi.org/10.31000/bvaj.v9i2.14745

Keywords:

Transfer pricing, koneksi politik, penghindaran pajak, kepemilikan asing

Abstract

This research is important considering the rampant practice of tax avoidance in the energy sector that has an impact on state revenue. The aim is to test the influence of transfer pricing and political connections on tax avoidance, as well as the role of foreign ownership moderation. Using a quantitative approach, secondary data on energy companies listed on the IDX (2021–2024) were analyzed by regression panel data and MRA. The results showed that transfer pricing had a significant positive effect on tax avoidance, while political connections were not significant. Foreign ownership fails to moderate both relationships. These findings strengthen the agency theory by showing that managerial incentives in transfer pricing are more dominant than political or ownership factors. The novelty of the research lies in the integration of three strategic variables in the context of Indonesia's post-pandemic energy sector. The main contribution is policy recommendations for tax authorities to strengthen supervision of transactions between related parties, as well as for foreign investors to improve governance transparency. This study fills a gap in the literature on the dynamics of foreign ownership moderation in aggressive taxation practices in emerging markets.

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2025-12-09

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Vol. 9 No. 2 (2025): December

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