The Effect of Related Party Transaction, Financial Constraints, and Thin Capitalization on Tax Avoidance in Properties & Real Estate Companies Listed on The Indonesian Stock Exchange (IDX)

Abstract

Purpose: This study aims to determine the effect of Related Party Transactions, Financial Constraints, and Thin Capitalization on Tax Avoidance in Properties and Real Estate companies listed on the Indonesia  Stock Exchange (IDX) during the 2022–2024 period.

Design/methodology/approach: This study employed an associative research design using quantitative methods and secondary data obtained from the annual reports of companies listed on the Indonesia Stock Exchange. The population consisted of 92 companies, and 48 companies were selected as the research sample using purposive sampling, resulting in 144 firm year observations. The data analysis method used was multiple linear regression analysis using IBM SPSS Statistics 32.

Findings: The result of this study indicate that Related Party Transactions have a positive and significant effect on Tax Avoidance and Financial Constraints also have a positive and significant effect on Tax Avoidance. However, Thin Capitalization does not have a significant effect on Tax Avoidance.

Practical implicatons: The findings provide useful insights for investors, corporate management, and tax authorities in assessing factors that influence corporate tax avoidance practices and support better decision-making related to taxation and corporate governance.

Originality/value: This study contributes to the development of the literature by presenting recent empirical evidence on the determinants of Tax Avoidance in Properties and Real Estate companies during the 2022–2024 period.This study is classified as empirical research.

Paper type: Empirical.