JRSSEM 2023, Vol. 02, No. 09, 2134 – 2141

E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494

DOI : 10.59141/jrssem.v2i09.445 https://jrssem.publikasiindonesia.id/index.php/jrssem/index

TAX AVOIDANCE OF COAL MINING COMPANIES IN

INDONESIA

Joko Susilo

1

Joko Susilo

INTRODUCTION

Tax avoidance is a business practiced

to keep taxpayers free of taxation while

posing no risk to the taxpayers themselves

because it follows tax regulations (Pohan,

even though they sometimes explicitly

one's tax burden without breaking the law.

Google is an example of a high-profile

case of tax avoidance in Indonesia.

According to tax observer Danny

Darussalam, as quoted by detik.com,

Google purposefully did not establish a

Permanent Business Entity (BUT) because it

did not want to be subject to income tax in

Indonesia. According to the media Tirto,

Adaro diverted income and profits

Furthermore, Global Witness discovered

Adaro evading US$125 million in taxes

owed to the Indonesian government.

Furthermore, in 2010, Indonesia

Corruption Watch reported fraudulent

sales by three Bakrie Group coal

companies. (Olivia & Dwimulyani, 2019)

discovered that coal companies used thin

capitalization to minimize capital. Even in

various conditions, some companies have

company losses over time. PT Bumi

Resources Tbk is aware of this (BUMI).

According to (Zherniansyah, 2013),

companies that use coal in their business

processes understandably want to manage

the risk of fluctuating coal prices.

Previous research on the variables

tax avoidance in Ghana. Wang Chen (2012)

discovered that transfer pricing did not

affect tax avoidance. According to (Putri,

significant impact on corporate tax

aggressiveness. Furthermore, (Nadhifah &

Arif, 2020) claims that thin capitalization

affects tax aggressiveness, whereas (Olivia

& Dwimulyani, 2019) claims that thin

capitalization does not affect tax

avoidance. Finally, (Lee, 2017) discovers

Literature Review

Theory of Agency

Theory of Agency A contract between

the manager and the owner in which the

owner wishes to delegate authority to the

manager is put forward in this theory.

Tax Avoidance

Tax avoidance is a valid tax avoidance

because it does not violate tax regulations

(Pohan, 2014). Meanwhile, (Mardiasmo,

the tax burden while remaining within the

law.

Transfer Pricing

affiliated companies in his book Transfer

for products supplied to other

organizational segments in multinational

corporations.

Earning Management

(Fischer & Rosenzweig, 1995), also

known as earnings management, is the

behavior of managers in increasing

(decreasing) profits from units under their

authority, regardless of whether long-term

inextricably linked to the distinction

between debt and capital financing.

Hedging

(Hardjito, 2002) Hedging is a strategy

used to limit potential losses caused by

fluctuations in currency exchange rates

(exposure). Furthermore, (Hull, 2008)

defines positive hedging as one that

eliminates all risks.

MATERIALS AND METHODS

The quantitative research method with

a descriptive approach was chosen by the

researcher (Sugiyono, 2015). The

population chosen was the coal mining

companies listed on the IDX from 2015 to

regression analysis mode, classical

RESULTS AND DISCUSSION

to process written data in this thesis.

Table 1. Data Analysis

F Test (Simultaneous Effect)

Table 1 shows that the prob value (F-

statistics) was 0.0318 less than 0.05,

indicating that transfer pricing, earnings

management, thin capitalization, and

Joko Susilo

avoidance at the same time.

Determination Coefficient

The Adjusted R-Square value was

0.083, as could be seen. This demonstrated

that transfer pricing, earnings

management, thin capitalization, and

variables, and there was another effect of

The Influence of Transfer Pricing on Tax

Avoidance

The transfer pricing variable had a

significant value of 0.6427 which was

greater than 0.05. That was, transfer pricing

did not affect the tax avoidance variable.

Variable transfer pricing did not affect tax

avoidance; this could be due to the proxy's

dissimilarity to previous studies, in which

(Yuniasih et al., 2012). According to (Astuti

& Aryani, 2017), transfer pricing involved

business groups because it happened

between affiliates; this was related to

agency theory. Principals who had an

interest in the company's long-term

viability and agents who carry out those

interests frequently had opposing

viewpoints. Because transfer pricing

involved multiple agents and companies,

stake. This finding was consistent with

studies that found transfer pricing did not

affect tax avoidance (Panjalusman Paskalis

et al., 2018), (Napitu & Kurniawan, 2016),

(Mukhtar, 2021); (Vicard, 2015), and

(Hasibuan & Gultom, 2021). Meanwhile,

this finding differed from those of (Amidu

found to have an impact on tax avoidance

The Influence of Earning Management on

Tax Avoidance

The earnings management variable

had a significant value of 0.1834 which was

greater than 0.05. As a result, earnings

management did not affect tax avoidance.

Companies use earnings management to

minimize tax obligations in the context of

taxation. Law of the Republic of Indonesia

Number 36 of 2008 concerning the Fourth

research, coal mining companies did not

use earning management to reduce their

taxes. Earning management did not affect

tax avoidance, according to (Putri, 2014),

(Nadhifah & Arif, 2020), (Githaiga et al.,

Meanwhile, these findings contradict each

other (Amidu et al., 2019). Additionally,

(Nurhandono & Firmansyah, 2017) and

(Pratama, 2020) discovered that earnings

The Influence of Thin Capitalization on Tax

Avoidance

The variable thin capitalization had a

significant value of 0.0101, which was less

than 0.05. That was, thin capitalization

affected the tax avoidance variable.

company capital to calculate income tax,

regulation's scope. This was what coal

mining companies could do to increase

their debt and thus their interest expense.

As a result, coal companies used thin

capitalization schemes to reduce their

taxes. Thin capitalization had a significant

impact on the level of tax avoidance (Lanis

& Richardson, 2012), (Winarto & Daito,

Thin capitalization affected tax avoidance

0.05. As a result, hedging did not affect the

variable of tax avoidance. This finding was

consistent with that of (Lianty et al., 2017),

who found that hedging does not affect

tax aggressiveness. Furthermore,

(Nurhandono & Firmansyah, 2017) claimed

that hedging did not affect tax

aggressiveness. In terms of tax avoidance,

it has been discovered that the

aggressiveness of tax reporting

(Donohoe, 2015). Derivatives used in this

research were those that were not used for

speculating or trading, such as those used

for hedging. In Indonesia, (Brian & Martani,

aggressive than non-derivative users

(without comparing their goals). (Lee,

hedging and tax avoidance.

Transfer pricing, earnings

management, or hedging do not affect tax

avoidance. For the 2015-2019 period, coal

companies listed on the IDX used transfer

pricing not to avoid taxes, but for other

reasons that necessitated additional

investigation. Although profit is used to

determine how much tax a company

should pay, it is not used by coal

companies to avoid paying taxes. Hedging

avoidance. Miller's theory that debt with

interest charges can be used by companies

to increase spending and affect the

amount of corporate taxes can explain this

effect.

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