The Impact of Bonus Mechanisms, Tunneling Incentives, and Good Corporate Governance (GCG) on Transfer Pricing Activities

Abstract

This study aims to analyze the transfer pricing used by companies as a technique to save taxes and analyze the effect of bonus mechanisms, tunneling incentives, and good corporate governance on transfer pricing activities in multinational companies listed on the Indonesia Stock Exchange. The data for this study were obtained from multinational companies in Indonesia listed on the Indonesia Stock Exchange from 2015 to 2020, with data collection techniques using database collection techniques. The population of this study were 18 companies so that 90 observations were obtained. The sampling technique in this research is purposive sampling. This study uses secondary data, namely annual reports and financial statements.The results show that the bonus mechanism has no effect on transfer pricing practices, and this study also shows that tunneling incentives have no effect on transfer pricing practices, but this study shows that good corporate governance has a positive effect on transfer pricing aggressiveness activities. This research contributes practically in providing information to company management for consideration in implementing transfer pricing and for the Director General of Taxes to anticipate the implementation of transfer pricing for multinational companies.