THE INFLUENCE OF POLITICAL CONNECTIONS, RELATED-PARTY TRANSACTIONS, AND CORPORATE GOVERNANCE ON TAX AVOIDANCE IN MANUFACTURING COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE

: This study aims to examine the influence of political connections, related-party transactions, and corporate governance on tax avoidance. The sample for this research consists of manufacturing companies listed on the Indonesia Stock Exchange during the period of 2014-2019. The sample was selected using purposive sampling technique, resulting in 25 companies. The analytical technique employed in this research is panel data regression analysis using Eviews version 10 software. The research findings indicate that political connections, related-party transactions, the proportion of independent commissioners on the board,


INTRODUCTION
In 2014, European countries faced controversy regarding Ireland's tax facilities, leading many large multinational companies such as Amazon, Apple, Facebook, PayPal, and Twitter to establish their headquarters in Ireland to benefit from lower tax rates compared to other European countries.The Swiss HSBC case further fueled the debate on tax avoidance in the continent.Towards the end of 2014, it was also revealed that tax evasion cases involved many multinational companies in Luxembourg.Recently, there have been numerous tax avoidance practices carried out by major global companies, as shown in Table 1 (Chew, 2016).Tax avoidance has also been conducted by companies such as Asian Agri and Bakrie Group (Asadanie & Venusita, 2020).Both companies are suspected of engaging in tax evasion related to their political connections.Asian Agri is a subsidiary of Royal Golden Eagle Previous research has stated that political connections enhance company performance and yield tax benefits (Wu et al., 2012).Similar results indicate that political connections are positively related to firm value, through knowledge and influence in the development of laws affecting company performance (Guerra Pérez et al., 2015).Conversely, (Du & Girma, 2010) found that private companies not connected to politics have higher productivity compared to politically connected companies.This aligns with tax avoidance practices.To generate high profits, companies must engage in various business activities, including opening new factories or establishing subsidiaries.
Transactions between the parent company and its subsidiaries are called related-party transactions (RPT), which must be disclosed with transfer pricing regulations and reported in the parent company's financial statements.Intercompany transactions can be seen as transactions that play a significant role in meeting the company's economic needs (Farahmita, 2011).So far, there has been limited research on the role of related-party transactions in tax avoidance.Research on the influence of related-party transactions on tax aggressiveness indicates that related-party transactions have a significant and positive effect on tax aggressiveness (Azizah & Kusmuriyanto, 2016).Another study examined the influence of related-party transactions and thin capitalization on tax avoidance strategies and found that related-party transactions (RPT-receivables and RPT-debt did not significantly affect tax avoidance strategies) (Darma, 2019).
In addition to political connections and related-party transactions, corporate governance is also a factor that can affect tax avoidance.

Literature Review
Tax is one of the largest sources of national revenue in a country.However, not all taxpayers are willing to fulfill their tax obligations, which violates national tax laws and regulations (Aumeerun et al., 2016).
Non-payment and non-reporting can be done legally, through tax evasion, and also illegally, through tax fraud.Tax avoidance is defined as tax savings generated by reducing common taxes, where sometimes the legality of minimizing tax liabilities is still questionable (Lim, 2011).Tax avoidance takes actions to minimize tax liabilities within the legal framework, while tax evasion takes illegal actions to avoid Governance on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange paying taxes.Tax planning is the first step in tax management, used to estimate the tax owed and take tax avoidance actions by collecting and examining tax laws, with the intention of choosing the types of taxsaving measures that can be implemented (Astutik & Mildawati, 2016).A company uses various strategies to reduce its tax liability, including engaging in consulting services (Huseynov & Klamm, 2012).Tax management should be carried out as effectively as possible to avoid tax evasion.
Companies can also take aggressive actions by utilizing the smallest possible loopholes in tax laws to reduce their tax burden (Putra & Merkusiwati, 2016).
The most obvious benefit of tax avoidance is cash savings from tax avoidance.Cash savings lead to increased company cash flow, where the company can use its stored cash for investment, thereby increasing the company's value and shareholder wealth by increasing dividends.Likewise, managers can benefit from it by being compensated for effective tax management (Annuar et al., 2014).
However, there are adverse effects accompanying tax avoidance activities.
Countries facing an increasing amount of tax avoidance tend to exhibit less productive mixed investments, where economic growth is low, and public companies can suffer negative consequences (Dalu et al., 2012)

Descriptive Statistics
The results of descriptive statistical tests of the variables used in this study are as follows:

Regression Results
The Likewise, there is a significant impact of the proportion of board commissioners on tax avoidance, indicating the effectiveness of independent board commissioners in trying to prevent tax avoidance measures (Dewi & Jati, 2014).
Audit quality has a significant effect on tax avoidance with a significance value of 0.005 (significance smaller than 0.05).
The regression coefficient value for the audit quality variable is -0.119, indicating a negative influence.This means that the higher the audit quality, the lower the tax avoidance.This value can also be interpreted as a 0.119 decrease in tax avoidance per unit increase in audit quality.
In PAFs, it will be more challenging to implement aggressive tax policies.
The audit committee has a significant effect on tax avoidance with a significance value of 0.033 (significance less than 0.05).
The regression coefficient value for the audit committee variable is -0.047, indicating a negative influence.This means that the higher the audit committee, the lower the tax avoidance.The primary role of the audit committee is to develop a global-class corporate governance framework, primarily for listed companies.
The audit committee believes that companies need guidance to improve their Governance on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange corporate governance standards, which should be equivalent to international standards (Ramly, 2012).The audit committee plays a significant role in overseeing the financial reporting process under its main duty to ensure the integrity and credibility of financial reports (Gajevszky, 2014).The audit committee functions to provide views on issues related to company financial policies, accounting, and internal control (Pranata, 2014).The number of audit committees in a company that does not comply with BEI regulations will increase management actions to minimize tax benefits for tax avoidance.

International
The results of this research demonstrate that the audit committee does not have a positive effect on tax avoidance.These findings are consistent with previous research(Swingly & Sukartha,   2015)  stating that the audit committee's role is to monitor and assist the board of commissioners in producing quality information, enabling control to minimize conflicts of interest within the company, including tax savings in the form of tax avoidance.CONCLUSIONBased on the results of the discussions that have been conducted, it can be concluded that political connections, related party transactions, the proportion of independent board of commissioners, audit quality and audit committees have a significant influence on tax avoidance.

Table 1 Tax evasion scandal
Nuraini A 2 Riha Dedi Priantana 3 (Armstrong et al., 2015) governance is a requirement that must be Muhammad Nashir 1 Empirical research on the influence of corporate governance on tax avoidance is dominated in developed countries (James & Igbeng, 2015);(Fernandes et al., 2013);(Armstrong et al., 2015)and(Sabli & Md   Noor, 2012).In contrast, in developing countries, particularly Indonesia, research is still very limited. I this study, the author

Table 2 : Frequency Distribution
The Influence of Political Connections, Related-Party Transactions, and Corporate Governance on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange Based on Table 3, the mean value of

Tabel 4: Panel Data Regression Results with Random Effects
The Influence of Political Connections, Related-Party Transactions, and Corporate Governance on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange