The Effect of Tax Minimization and Exchange Rate on Transfer Pricing: The Moderating Role of Firm Size

Abstract

This study aims to investigate and understand the relationship between tax minimization and exchange rates on transfer pricing, with firm size acting as a moderating variable. The population of this study consists of energy sector companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2023 period. The sample was selected using a purposive sampling method, yielding 155 observational data. Data analysis was conducted using multiple linear regression and Moderated Regression Analysis (MRA), processed through SPSS Version 29. The results indicate that tax minimization and exchange rates have a negative effect on transfer pricing. Conversely, tax minimization and exchange rates moderated by firm size show a positive effect on transfer pricing. This indicates that corporate efforts to minimize tax burdens and exchange rate fluctuations serve as driving factors for companies to engage in transfer pricing. Future researchers are suggested to incorporate other independent variables that potentially influence transfer pricing practices, allowing the research model to explain transfer pricing variations more comprehensively.