To counter tax avoidance using transfer mispricing practices, Indonesia introduced a transfer pricing documentation policy. This policy requires taxpayers to be transparent with their transfer pricing decisions. Treating the implementation of this policy as a shock to the taxpayers, this paper examines how the transfer pricing documentation policy affects a firm's tax avoidance behaviour by employing regression discontinuity design and difference-in-difference. Immediately after introducing the policy, a regression discontinuity analysis results indicate a 0.9 percentage point increase in tax/sales among taxpayers obligated to prepare transfer pricing documentation. A 0.3 to 0.7 percentage point increase in the tax/sales of the treatment group is observed when difference-in-difference is established. These findings show that such policy implementation can discourage taxpayers' tax avoidance behaviour. In light of these results, the Indonesian tax authority may consider taking several actions to improve the implementation of TP docs, such as amending summary of TP docs so that it contains more valuable information regarding taxpayer’s arm’s length principle application, requiring simple TP docs for taxpayers below the threshold, providing continuously providing assistance and capacity building to the taxpayers regarding appropriate TP docs preparation and arm’s length principle application.

Bahasa Abstract

Dalam rangka pencegahan penghindaran pajak menggunakan praktik penyalahgunaan harga transfer, Indonesia mengadopsi kebijakan dokumen harga transfer. Pengaturan ini menwajibkan Wajib Pajak untuk transparan terhadap penetapan harga transfernya. Penelitian ini menggunakan kebijakan dokumen penetapan harga transfer sebagai shock untuk meneliti dampak implementasi dokumen penetapan harga transfer terhadap perilaku penghindaran pajak wajib pajak. Hasil analisis regression discontinuity design menunjukan bahwa satu tahun setelah kebijakan dokumen penetapan harga transfer diberlakukan terdapat kenaikan, secara rata-rata, 0.9 poin persentase pajak/penjualan pada wajib pajak yang wajib menyelenggarakan dokumen penetapan harga transfer. Hasil analasis difference-in-difference menunjukkan magnitudo dampak yang lebih kecil yakni sekitar 0.3 sampai 0.7 poin persentase. Hasil analisis menunjukkan bahwa implementasi kebijakan dokumen penetapan harga transfer dapat mendorong wajib pajak untuk mengurangi praktik penghindaran pajak melalui transfer pricing. Berdasarkan hasil tersebut, penelitian ini mengusulkan otoritas pajak Indonesia untuk dapat mengambil Langkah untuk meningkatkan penerapan dokumentasi harga transfer seperti mengubah ikhtisar dokumen harga transfer agar memuat informasi yang lebih bermakna seperti ringkasan penerapan prinsip kewajaran dan kelaziman usaha wajib pajak, mensyaratkan dokumen harga transfer yang sederhana bagi wajib pajak yang saat ini dikecualikan, menyediakan bantuan dan pengembangan kapasitas secara terus menerus bagi wajib pajak terkait penyelengaaran dokumen harga transfer dan penerapan prinsip kewajaran dan kelaziman usaha.


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