How Does International Corporate Avoid Tax?

This research aims to examine some of the concepts proposed as problems that describe the phenomenon and how international corporations avoid taxes. Are transfer pricing and thin capitalization schemes becoming choices for international corporations to avoid taxes, and how effective are tax regulations that address tax avoidance practices. This research was conducted on multinational non-financial companies listed on the Indonesia Stock Exchange for the 2013–2020 period, totalling 64 companies with a total of 512 observations. The sampling technique used for purposive sampling. The analytical method used to test the hypothesis is multiple regression using the Eviews version 12 program with panel data estimation. The study findings show that transfer pricing and thin capitalization schemes are the options for international corporations to avoid taxes. As a result of the differences in tax rates between countries, international companies tend to divert profits to countries with relatively low tax rates or countries with tax haven jurisdictions. This study implies that differences in tax policies and regulations between countries increase the aggressiveness of tax avoidance.