Proceedings of the 1st International Conference on Science and Technology in Administration and Management Information, ICSTIAMI 2019, 17-18 July 2019, Jakarta, Indonesia

Research Article

Evaluation of Tax Regulations About Debt Equity Ratio Instrument to Prevent Thin Capitalization in Relation to Investment and Tax Revenue Policy in Indonesia

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  • @INPROCEEDINGS{10.4108/eai.17-7-2019.2303516,
        author={Chairil Anwar Pohan and Karina  Duwanty and Pebriana  Arimbhi},
        title={Evaluation of Tax Regulations About Debt Equity Ratio Instrument to Prevent Thin Capitalization in Relation to Investment and Tax Revenue Policy in Indonesia},
        proceedings={Proceedings of the 1st International Conference on Science and Technology in Administration and Management Information, ICSTIAMI 2019, 17-18 July 2019, Jakarta, Indonesia},
        publisher={EAI},
        proceedings_a={ICSTIAMI},
        year={2021},
        month={1},
        keywords={debt equity ratio thin capitalization investment policy tax revenue in indonesia},
        doi={10.4108/eai.17-7-2019.2303516}
    }
    
  • Chairil Anwar Pohan
    Karina Duwanty
    Pebriana Arimbhi
    Year: 2021
    Evaluation of Tax Regulations About Debt Equity Ratio Instrument to Prevent Thin Capitalization in Relation to Investment and Tax Revenue Policy in Indonesia
    ICSTIAMI
    EAI
    DOI: 10.4108/eai.17-7-2019.2303516
Chairil Anwar Pohan1,*, Karina Duwanty1, Pebriana Arimbhi1
  • 1: Institut Ilmu Sosial dan Manajemen Stiami, Jakarta, Indonesia
*Contact email: anwar_phn@yahoo.com

Abstract

The government is aggressively preventing companies from tax evasion, one of which is by setting a debt to equity ratio. Many observers claim that such an arrangement is recognized as being able to counteract Thin Capitalization. However, if it is related to the investment policy in Indonesia, it seems that it is still not synergistic. This study aims to analyze the adequacy of the effectiveness of the application of taxation policies on the debt equity ratio instrument in counteracting the practice of thin capitalization in Indonesia and how the tax policy on the debt equity ratio instrument is linked to investment policies in Indonesia. This research approach is a qualitative approach with descriptive methods. The results of the study conclude that the application of taxation policies on the debt equity ratio instrument is quite effective in counteracting the practice of thin capitalization in Indonesia, the taxation policy on the debt equity ratio instrument indirectly affects investment policy in Indonesia, and there are still ratio constraints in implementing taxation policies on equity instruments. debt. Efforts to be able to overcome the obstacles that occur with appropriate socialization, education, supervision and inspection of taxpayers so that tax revenues can be optimal.