Tax Avoidance Tactics: Exploring the Interplay Between Institutional Ownership and Transfer Pricing
Abstract
The purpose of this study is to examine and evaluate the extent of the influence of institutional ownership and transfer pricing on tax avoidance practices in non-cyclical consumer sector companies listed on the Indonesia Stock Exchange (IDX) during the period 2019 to 2023. Tax avoidance is understood as a legal strategy and is often applied by companies to reduce the tax burden by utilizing loopholes or weaknesses in the tax regulation system. This research approach is quantitative in nature by applying multiple linear regression analysis methods based on secondary data obtained from the company's annual financial statements. The sample selection was carried out using purposive sampling technique using certain criteria, which resulted in 45 companies as samples with a total of 225 observations. Measurement of tax avoidance variables is done using the Cash Effective Tax Rate (CETR) method. The research findings indicate that neither institutional ownership nor transfer pricing has a significant effect on tax avoidance, although the direction of the relationship shown is positive and requires further research.
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References
Adelia, C., & Asalam, A. G. (2024). The Effect of Transfer Pricing, Leverage, and Profitability on Tax Avoidance in Food and Beverage Sub-Sector Companies BEI 2018-2021. 8, 652–660.
Adijanto, Isthika, Rahmawati, & Oktafiyani. (2022). Determinants of tax avoidance in mining companies in Indonesia. Fair Value: Scientific Journal of Accounting and Finance,5 (5), 2201-2208. https://doi.org/10.32670/fairvalue.v5i5.2303
Adrai, R., & Perkasa, D. H. (2024). Application of Business Ethics and Corporate Social Responsibility in International Human Resources Management. Journal of Madani Management and Business,6 (2), 68-85. https://doi.org/10.51353/jmbm.v6i2.950
Aqilla, A., & Sisdianto, E. (2024). Tax Avoidance Strategies and Their Implications for Tax Revenue Efficiency Case Analysis on Multinational Industries. Scientific Journal of Economic Management and Accounting, 1(3), 7–17.
Arliani, D., & Yohanes. (2023). The Effect of Institutional Ownership, Transfer Pricing, and Other Factors on Tax Avoidance. TSM Accounting E-Journal,3 (1), 17-32. https://doi.org/10.34208/ejatsm.v3i1.1844
Auliya, Juli Ratnawati, Enny Susilowati Mardjono, & Ratna Herawati. (2024). The Effect of Institutional Ownership, Transfer Pricing, and Sales Growth on Tax Avoidance. Al-Kharaj: Journal of Islamic Economics, Finance & Business,6 (5), 4197-4219. https://doi.org/10.47467/alkharaj.v6i5.1616
Azizah, N. W., & Muniroh, H. (2023). The Effect of Independent Commissioners, Profitability and Company Size on Tax Avoidance in Consumer Non Cyclicals Companies. Journal of Contemporary Accounting and Finance (JAKK),6 (1). https://doi.org/10.30596/jakk.v6i1.14898
Dewi, & Mustikasari. (2024). Analysis of Taxation Transfer Pricing Manipulation Handling in Responding to Global Challenges Renita. E-JA e-Journal of Accounting,30 (2), 460-473. http://scioteca.caf.com/bitstream/handle/123456789/1091/RED2017-Eng-8ene.pdf?sequence=12&isAllowed=y%0Ahttp://dx.doi.org/10.1016/j.regsciurbeco.2008.06.005%0Ahttps://www.researchgate.net/publication/305320484_SISTEM_PEMBETUNGAN_TERPUSAT_STRATEGI_MELESTARI
Dharmayanti, N., Yetmi, Y. S., Atichasari, A. S., Ratnasari, A., & Fitriyani, F. (2024). Does Institutional Ownership Moderating Tax Avoidance? An Empirical Analysis In Indonesian List Company. JAK (Journal of Accounting) Scientific Review of Accounting,11 (1), 32-49. https://doi.org/10.30656/jak.v11i1.6044
Fadhali, M. D. M., & Laksito, H. (2023). The Effect of Institutional Ownership, Profitability, Leverage, and Related Party Transactions on Tax Avoidance. Diponegoro Journal of Accounting, 12, 1–15.
Fadly, M., Danang, K., & Muhammad, W. (2024). JURIDICAL IMPLICATIONS OF MULTINATIONAL CORPORATION ON TRANSFER PRICING IN INDONESIA. Journal of Panorama of Law, 9(1).
Fatrisia, M. E. (2024). The Influence Of Consumer Ethnocentrism, Attitudes And Consumer Intentions On Actual Purchasing Behavior On Instant Noodle Products. https://doi.org/10.37641/jimkes.v12i5.2794
Felix, T., & Iskak, J. (2021). The Effect of Profitability, Leverage, and Corporate Governance on Tax Avoidance. Journal of Bina Akuntansi, 12(1).
Fitri and, & Hakim. (2024). Does Institutional Ownership Moderate the Effect of Transfer Pricing and Sales Growth on Tax Avoidance16(2), 114–132.
Heryana, R. P., Luthfi, D., & Santoso, R. A. (2024). Analysis of the Effect of Profitability and Leverage on Tax Avoidance in Sinta Indexed Articles 2018-2022. Journal of Revenue Journal of Accounting,5 (1), 511-532. https://www.kemenkeu.go.id
Indrastuti, T. D., & Apriliawati, Y. (2023). The Impact of Transfer Pricing, Thin Capitalization, and Firm Size on Tax Avoidance with Multinational Enterprise as a Moderating Variable. Indonesian Journal of Economics and Management,4 (1), 39-61. https://doi.org/10.35313/ijem.v4i1.5612
Jiang. (2024). Corporate Governance in the Dimension of Institutional Ownership Moderates Tax Avoidance. Journal of Accounting and Business,23 (2), 264-276. https://doi.org/10.20961/jab.v23i2.1146
Kovermann, J., & Velte, P. (2019). LONG-RUN PERFORMANCE OF INITIAL PUBLIC OFFERINGS.16 (4), 111-127. https://doi.org/10.22495/cocv16i4art10
Kurniana, E., Wijayanti, R., & Surakarta, U. M. (2023). The Role Of Internal Control In The Relationship Between Board Gender Diversity, Audit Committee, And Independent Commissioners On Tax Aggressiveness The Role Of Internal Control In The Relationship Between Board Gender Diversity, Audit Committee, And Independent Commissioners. Management Studies and Entrepreneurship Journal,4 (6), 8837-8848. http://journal.yrpipku.com/index.php/msej
Kusufiyah, Y. V., & Anggraini, D. (2019). The Role of Independent Commissioners, Company Size, Financial Performance and Leverage on Tax Avoidance Efforts. E-Journal of Accounting,26 , 1601. https://doi.org/10.24843/eja.2019.v26.i02.p28
Muhajirin, M. Y., Junaid, A., Arif, M., & Pramukti, A. (2021). The Effect of Transfer Pricing on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange. Center of Economic Student Journal,4 (2), 1-19. https://jurnal.fe.umi.ac.id/index.php/CSEJ/article/view/423
Nugraha, R., & Kristanto, A. B. (2019). FACTORS INFLUENCING TAX HAVEN UTILIZATION. 9(2), 160–171.
Nurrahmi, A. D., & Rahayu, S. (2020). The effect of business strategy, transfer pricing, and political connections on tax avoidance (study of companies in the mining sector listed on the Indonesian stock exchange). Jae (Journal of Accounting and Economics), 5(2), 48–57.
Okafor, P. I., & Egbunike, F. O. (2023). Institutional Ownership and Tax Avoidance: Evidence from Nigerian Firms. International Journal of Business and Finance. International Journal of Business and Finance, 21(1), 112–124.
Pamungkas, & Nehayati. (2024). SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC Optimizing Transfer Pricing in Indonesia: Exploring the Impact of Tax Minimization, Tunneling Incentives, and Audit Committees.8 (May), 253-274.
Parulian, A. A., Hermawan, A., Suryana, P., & Kristiawan, H. (2022). Impact of Intellectual Capital and Leverage on Profitability and Their Implications for Firm Value in Indonesian Healthcare Providers. Journal of Corporate Governance, Insurance, and Risk Management.
Prasetyo, D. A., & Haryanto, Y. (2021). The Effect of Fiscal Supervision and Report Transparency on Tax Avoidance in Indonesia. Journal of Accounting and Finance, 15(2), 45–46.
Rahayu, & Wahyudi. (2024). Analysis of the Effect of Institutional Ownership on Company Financial Performance. Rimba Journal: Research in Business Management Science and Accounting,2 (3), 94-108. https://doi.org/10.61132/rimba.v2i3.1078
Rahayu, Wulandari, N., & Zainal, G. J. I. (2023). What's with Tax Avoidance in Indonesia? Journal of Economic Education and Entrepreneurship Studies,4 (2), 747-769. https://doi.org/10.26858/je3s.v4i2.1870
Reswita, Y., Lukman, S., Febrianto, R., & Adrianto, F. (2024). Tax Avoidance on Institutional Ownership: Case Study of Banking Companies in Indonesian Capital Market. 188–198.
Rizki, & Nugroho. (2024). How Institutional and Managerial Ownership, Transfer Pricing and Company Size Affect Tax Avoidance3(2), 35–47.
Sadeva, Suharno, & Sunarti. (2020). THE EFFECT OF INSTITUTIONAL OWNERSHIP, COMPANY SIZE, LEVERAGE AND TRANSFER PRICING ON TAX AVOIDANCE (Study on Mining Companies Listed on the Indonesia Stock Exchange in 2014-2018). Bramantiyo. Soil Mechanics and Foundation Engineering, 16(1).
Sari, I. R., & Kurniato, C. A. (2022). The Effect of Profitability, Debt Covenants and Transfer Pricing on Tax Avoidance in Energy Sector Companies Listed on the Indonesia Stock Exchange in 2016-2021. SCIENTIFIC JOURNAL OF REFLECTION: Economic, Accounting, Management and Business,5 (4), 944-950. https://doi.org/10.37481/sjr.v5i4.569
Setiawan, M., & Wicaksono, H. (2020). The Role of Institutional Ownership in Controlling Tax Avoidance in Indonesia. Indonesian Journal of Economics and Business, 15(3), 102–112.
Shabika, B., Hariadi, B., & Baridwan, Z. (2023). Effect of Book Tax Difference, Foreign Ownership and Transfer Pricing on Tax Avoidance with Profit Management as Moderating Variables. The International Journal of Accounting and Business Society,31 (1), 59-70. https://doi.org/10.21776/ijabs.2023.31.1.687
Sudaryono, D., & Murwaningsari, E. (2023). the Effect of Transfer Pricing, Intangible Assets and Capital Intensity on Tax Aggresiveness With Foreign Ownership As a Moderating Variable. International Journal of Economic, Business, Accounting, Agriculture Management and Sharia Administration (IJEBAS),3 (1), 222-238. https://doi.org/10.54443/ijebas.v3i1.665
Tarmizi, A., & Perkasa, D. H. (2022). The Effect of Institutional Ownership, Family Ownership, and Thin Capitalization on Tax Avoidance. Journal of Managerial and Entrepreneurial Perspectives (JPMK),3 (1), 47-61. https://doi.org/10.59832/jpmk.v3i1.182
Tyas, I. R. (2021). Analysis of the Impact of the Effectiveness of Transfer Pricing Policy in Counteracting Tax Avoidance at KPP Madya Jakarta Pusat in 2018-2019. 1, 31–38.
Wardana, P. G., & Asalam, A. G. (2022). The Effect of Transfer Pricing, Institutional Ownership and Fiscal Loss Compensation on Tax Avoidance Case Study of Manufacturing Companies Listed on the Indonesia Stock Exchange in 2015-2019. EKOMBIS REVIEW: Scientific Journal of Economics and Business,10 (1), 56-66. https://doi.org/10.37676/ekombis.v10i1.1699
Wijaya, S., & Rahayu, F. D. (2021). The Effect of Transfer Pricing Aggressiveness, Use of Tax Hedge Countries, and Institutional Ownership on Tax Avoidance. Journal of Information, Taxation, Accounting, and Public Finance,16 (2), 245-264. https://doi.org/10.25105/jipak.v16i2.9257
Adelia, C., & Asalam, A. G. (2024). The Effect of Transfer Pricing, Leverage, and Profitability on Tax Avoidance in Food and Beverage Sub-Sector Companies BEI 2018-2021. 8, 652–660.
Adijanto, Isthika, Rahmawati, & Oktafiyani. (2022). Determinants of tax avoidance in mining companies in Indonesia. Fair Value: Scientific Journal of Accounting and Finance,5 (5), 2201-2208. https://doi.org/10.32670/fairvalue.v5i5.2303
Adrai, R., & Perkasa, D. H. (2024). Application of Business Ethics and Corporate Social Responsibility in International Human Resources Management. Journal of Madani Management and Business,6 (2), 68-85. https://doi.org/10.51353/jmbm.v6i2.950
Aqilla, A., & Sisdianto, E. (2024). Tax Avoidance Strategies and Their Implications for Tax Revenue Efficiency Case Analysis on Multinational Industries. Scientific Journal of Economic Management and Accounting, 1(3), 7–17.
Arliani, D., & Yohanes. (2023). The Effect of Institutional Ownership, Transfer Pricing, and Other Factors on Tax Avoidance. TSM Accounting E-Journal,3 (1), 17-32. https://doi.org/10.34208/ejatsm.v3i1.1844
Auliya, Juli Ratnawati, Enny Susilowati Mardjono, & Ratna Herawati. (2024). The Effect of Institutional Ownership, Transfer Pricing, and Sales Growth on Tax Avoidance. Al-Kharaj: Journal of Islamic Economics, Finance & Business,6 (5), 4197-4219. https://doi.org/10.47467/alkharaj.v6i5.1616
Azizah, N. W., & Muniroh, H. (2023). The Effect of Independent Commissioners, Profitability and Company Size on Tax Avoidance in Consumer Non Cyclicals Companies. Journal of Contemporary Accounting and Finance (JAKK),6 (1). https://doi.org/10.30596/jakk.v6i1.14898
Dewi, & Mustikasari. (2024). Analysis of Taxation Transfer Pricing Manipulation Handling in Responding to Global Challenges Renita. E-JA e-Journal of Accounting,30 (2), 460-473. http://scioteca.caf.com/bitstream/handle/123456789/1091/RED2017-Eng- 8ene.pdf?sequence=12&isAllowed=y%0Ahttp://dx.doi.org/10.1016/j.regsciurbeco.2008.06.005%0Ahttps://www.researchgate.net/publication/305320484_SISTEM_PEMBETUNGAN_TERPUSAT_STRATEGI_MELESTARI
Dharmayanti, N., Yetmi, Y. S., Atichasari, A. S., Ratnasari, A., & Fitriyani, F. (2024). Does Institutional Ownership Moderating Tax Avoidance? An Empirical Analysis In Indonesian List Company. JAK (Journal of Accounting) Scientific Review of Accounting,11 (1), 32-49. https://doi.org/10.30656/jak.v11i1.6044
Fadhali, M. D. M., & Laksito, H. (2023). The Effect of Institutional Ownership, Profitability, Leverage, and Related Party Transactions on Tax Avoidance. Diponegoro Journal of Accounting, 12, 1–15.
Fadly, M., Danang, K., & Muhammad, W. (2024). JURIDICAL IMPLICATIONS OF MULTINATIONAL CORPORATION ON TRANSFER PRICING IN INDONESIA. Journal of Panorama of Law, 9(1).
Fatrisia, M. E. (2024). The Influence Of Consumer Ethnocentrism, Attitudes And Consumer Intentions On Actual Purchasing Behavior On Instant Noodle Products. https://doi.org/10.37641/jimkes.v12i5.2794
Felix, T., & Iskak, J. (2021). The Effect of Profitability, Leverage, and Corporate Governance on Tax Avoidance. Journal of Bina Akuntansi, 12(1).
Fitri and, & Hakim. (2024). Does Institutional Ownership Moderate the Effect of Transfer Pricing and Sales Growth on Tax Avoidance16(2), 114–132.
Heryana, R. P., Luthfi, D., & Santoso, R. A. (2024). Analysis of the Effect of Profitability and Leverage on Tax Avoidance in Sinta Indexed Articles 2018-2022. Journal of Revenue Journal of Accounting,5 (1), 511-532. https://www.kemenkeu.go.id
Indrastuti, T. D., & Apriliawati, Y. (2023). The Impact of Transfer Pricing, Thin Capitalization, and Firm Size on Tax Avoidance with Multinational Enterprise as a Moderating Variable. Indonesian Journal of Economics and Management,4 (1), 39-61. https://doi.org/10.35313/ijem.v4i1.5612
Jiang. (2024). Corporate Governance in the Dimension of Institutional Ownership Moderates Tax Avoidance. Journal of Accounting and Business,23 (2), 264-276. https://doi.org/10.20961/jab.v23i2.1146
Kovermann, J., & Velte, P. (2019). LONG-RUN PERFORMANCE OF INITIAL PUBLIC OFFERINGS.16 (4), 111-127. https://doi.org/10.22495/cocv16i4art10
Kurniana, E., Wijayanti, R., & Surakarta, U. M. (2023). The Role Of Internal Control In The Relationship Between Board Gender Diversity, Audit Committee, And Independent Commissioners On Tax Aggressiveness The Role Of Internal Control In The Relationship Between Board Gender Diversity, Audit Committee, And Independent Commissioners. Management Studies and Entrepreneurship Journal,4 (6), 8837-8848. http://journal.yrpipku.com/index.php/msej
Kusufiyah, Y. V., & Anggraini, D. (2019). The Role of Independent Commissioners, Company Size, Financial Performance and Leverage on Tax Avoidance Efforts. E-Journal of Accounting,26 , 1601. https://doi.org/10.24843/eja.2019.v26.i02.p28
Muhajirin, M. Y., Junaid, A., Arif, M., & Pramukti, A. (2021). The Effect of Transfer Pricing on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange. Center of Economic Student Journal,4 (2), 1-19. https://jurnal.fe.umi.ac.id/index.php/CSEJ/article/view/423
Nugraha, R., & Kristanto, A. B. (2019). FACTORS INFLUENCING TAX HAVEN UTILIZATION. 9(2), 160–171.
Nurrahmi, A. D., & Rahayu, S. (2020). The effect of business strategy, transfer pricing, and political connections on tax avoidance (study of companies in the mining sector listed on the Indonesian stock exchange). Jae (Journal of Accounting and Economics), 5(2), 48–57.
Okafor, P. I., & Egbunike, F. O. (2023). Institutional Ownership and Tax Avoidance: Evidence from Nigerian Firms. International Journal of Business and Finance. International Journal of Business and Finance, 21(1), 112–124.
Pamungkas, & Nehayati. (2024). SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC Optimizing Transfer Pricing in Indonesia: Exploring the Impact of Tax Minimization, Tunneling Incentives, and Audit Committees.8 (May), 253-274.
Parulian, A. A., Hermawan, A., Suryana, P., & Kristiawan, H. (2022). Impact of Intellectual Capital and Leverage on Profitability and Their Implications for Firm Value in Indonesian Healthcare Providers. Journal of Corporate Governance, Insurance, and Risk Management.
Prasetyo, D. A., & Haryanto, Y. (2021). The Effect of Fiscal Supervision and Report Transparency on Tax Avoidance in Indonesia. Journal of Accounting and Finance, 15(2), 45–46.
Rahayu, & Wahyudi. (2024). Analysis of the Effect of Institutional Ownership on Company Financial Performance. Rimba Journal: Research in Business Management Science and Accounting,2 (3), 94-108. https://doi.org/10.61132/rimba.v2i3.1078
Rahayu, Wulandari, N., & Zainal, G. J. I. (2023). What's with Tax Avoidance in Indonesia? Journal of Economic Education and Entrepreneurship Studies,4 (2), 747-769. https://doi.org/10.26858/je3s.v4i2.1870
Reswita, Y., Lukman, S., Febrianto, R., & Adrianto, F. (2024). Tax Avoidance on Institutional Ownership: Case Study of Banking Companies in Indonesian Capital Market. 188–198.
Rizki, & Nugroho. (2024). How Institutional and Managerial Ownership, Transfer Pricing and Company Size Affect Tax Avoidance3(2), 35–47.
Sadeva, Suharno, & Sunarti. (2020). THE EFFECT OF INSTITUTIONAL OWNERSHIP, COMPANY SIZE, LEVERAGE AND TRANSFER PRICING ON TAX AVOIDANCE (Study on Mining Companies Listed on the Indonesia Stock Exchange in 2014-2018). Bramantiyo. Soil Mechanics and Foundation Engineering, 16(1).
Sari, I. R., & Kurniato, C. A. (2022). The Effect of Profitability, Debt Covenants and Transfer Pricing on Tax Avoidance in Energy Sector Companies Listed on the Indonesia Stock Exchange in 2016-2021. SCIENTIFIC JOURNAL OF REFLECTION: Economic, Accounting, Management and Business,5 (4), 944-950. https://doi.org/10.37481/sjr.v5i4.569
Setiawan, M., & Wicaksono, H. (2020). The Role of Institutional Ownership in Controlling Tax Avoidance in Indonesia. Indonesian Journal of Economics and Business, 15(3), 102–112.
Shabika, B., Hariadi, B., & Baridwan, Z. (2023). Effect of Book Tax Difference, Foreign Ownership and Transfer Pricing on Tax Avoidance with Profit Management as Moderating Variables. The International Journal of Accounting and Business Society,31 (1), 59-70. https://doi.org/10.21776/ijabs.2023.31.1.687
Sudaryono, D., & Murwaningsari, E. (2023). the Effect of Transfer Pricing, Intangible Assets and Capital Intensity on Tax Aggresiveness With Foreign Ownership As a Moderating Variable. International Journal of Economic, Business, Accounting, Agriculture Management and Sharia Administration (IJEBAS),3 (1), 222-238. https://doi.org/10.54443/ijebas.v3i1.665
Tarmizi, A., & Perkasa, D. H. (2022). The Effect of Institutional Ownership, Family Ownership, and Thin Capitalization on Tax Avoidance. Journal of Managerial and Entrepreneurial Perspectives (JPMK),3 (1), 47-61. https://doi.org/10.59832/jpmk.v3i1.182
Tyas, I. R. (2021). Analysis of the Impact of the Effectiveness of Transfer Pricing Policy in Counteracting Tax Avoidance at KPP Madya Jakarta Pusat in 2018-2019. 1, 31–38.
Wardana, P. G., & Asalam, A. G. (2022). The Effect of Transfer Pricing, Institutional Ownership and Fiscal Loss Compensation on Tax Avoidance Case Study of Manufacturing Companies Listed on the Indonesia Stock Exchange 2015-2019. EKOMBIS REVIEW: Scientific Journal of Economics and Business,10 (1), 56-66. https://doi.org/10.37676/ekombis.v10i1.1699
Wijaya, S., & Rahayu, F. D. (2021). The Effect of Transfer Pricing Aggressiveness, Use of Tax Hedge Countries, and Institutional Ownership on Tax Avoidance. Journal of Information, Taxation, Accounting, and Public Finance,16 (2), 245-264. https://doi.org/10.25105/jipak.v16i2.9257
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