Tax Avoidance with Maqasid Syariah: Empirical Insights on Derivatives, Debt Shifting, Transfer Pricing, and Financial Distress †

• Published in: Journal of Risk and Financial Management
• Main Author: Putri V.R.; Mohamad Yunus M.H.S.; Zakaria N.B.; Zifi M.P.; Sastrodiharjo I.; Dewi R.
• Format: Article
• Language: English
• Published: Multidisciplinary Digital Publishing Institute (MDPI) 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85210565490&doi=10.3390%2fjrfm17110519&partnerID=40&md5=7a8634babecb4b8bef8b73426396ec7d

This study analyzes and investigates how financial factors, namely, derivatives, debt shifting, and transfer pricing, influence tax avoidance, with financial distress as an interaction variable, within the framework of stakeholder theory and positive accounting theory. Adding more uniqueness, this study injected the Maqasid Syariah elements into the framework. Conventional banks and non-bank institutions listed on the Indonesia Stock Exchange (IDX) between 2017 and 2022 were selected, comprising 414 final company-year observations. The study utilized E-Views software for data processing. The findings indicate that debt shifting negatively impacts tax avoidance, while derivatives have no significant influence. Transfer pricing positively impacts tax avoidance. Financial distress does not moderate the relationship between these financial practices and tax avoidance. From an Islamic perspective, practices such as transfer pricing and debt shifting, when used to avoid tax, contradict the principles of Maqasid Syariah, which emphasize fairness, wealth distribution, and societal welfare. © 2024 by the authors.