THE EFFECT OF TAX EXPENSE, BONUS MECHANISM, AND TUNNELING INCENTIVE TOWARDS TRANSFER PRICING DECISION IN COMPANIES WITH PROFITABILITY AS A MODERATING VARIABLE

Abstract

This research aims to obtain empirical evidence about the effect of tax expense, bonus mechanism, and tunneling incentive partially towards transfer pricing decision in companies and the effect of profitability as a moderating variable towards that effect. The data used is secondary data obtained from the annual reports of mining companies companies listed on the Indonesia Stock Exchange 2016 – 2020. The sample selection used is purposive sampling method and the number of mining companies sampled in this research were 14 companies with 70 observation data for 5 years. The data analysis technique used in this study is linear multiple regression equations with Moderated Regression Analysis which is a special application of linear multiple regression equations. The results this research are (1) tax expense has a significant postitive effect towards transfer pricing decision; (2) bonus mechanism has no effect towards transfer pricing decision; (3) tunneling incentive has a significant postitive effect towards transfer pricing decision; (4) profitability moderate (strengthen) the effect of tax expense towards transfer pricing decision; (5) profitability does not moderate (not strengthen nor weaken) the effect of bonus mechanism towards transfer pricing decision; (6) profitability moderate (strengthen) the effect of tunneling incentive towards transfer pricing decision.