Transfer Pricing Audit Policy Design Toward A Fair Tax System In Indonesia

Abstract

The execution of transfer pricing (TP) audit policies, aimed at deterring tax evasion activities and ensuring adherence to the arm's length principle (ALP) among affiliated parties, is scrutinized in this investigation. This study adopts a qualitative research approach encompassing post-positivism and constructivism, employing data analysis methodologies like triangulation techniques and utilizing NVivo tools such as Coding. The research seeks to elucidate and scrutinize the enforcement of transfer pricing audit policies, pinpoint factors affecting their execution, and devise strategies for managing transfer pricing audits. Findings reveal that the enforcement of TP audit policies can be examined from the contextual policy aspect, encompassing influential interests, decision-making locus, and resource utilization, alongside considerations of policy content, including actor strategies and regulatory characteristics. External factors such as perceptions of the Indonesian tax system and internal factors such as human resource preparedness impact policy execution. Practical implications include the necessity to update operational guidelines, stay abreast of business model advancements, and enhance Customer Relationship Management (CRM) implementation to bolster TP audit efficacy.