Tax Avoidance through thin Capitalization (Evidence from Indonesian Firms)

Abstract

This paper examines the tax avoidance through thin capitalization evidence from publicly listed Indonesian firms from Indonesian Stock Exchange.  The population of this study is companies listed on the Indonesian Stock Exchange from 2009 until 2011. The sample research was taken by using purposive sampling method, in order to obtain a sample about 35 companies listed as foreign direct investment in the Indonesian Stock Exchange.  This research is done by using multiple regressions with SPSS.  The results for regression of thin capitalization with cost of debt indicates that no effect on tax avoidance. While the thin capitalization instruments regression results show that the debt to equity ratio and profitability affect on the profitability of tax avoidance.