The transfer pricing optimization behaviour in an Indonesian mining company: integration of tax and management accounting objective

Multinational Enterprises (MNEs) utilize transfer pricing to achieve various management and tax objectives, often prioritizing tax avoidance. However, cross-border transfer pricing poses significant challenges for many countries, leading to economic and social issues, including reduced tax revenue and broader societal problems. Despite efforts to develop transfer pricing policies, numerous obstacles persist, such as transparency, human resources, and ethical concerns. To address these complexities, a multi-dimensional approach is essential. This study adopts a behavioural perspective, specifically the Theory of Planned Behaviour (TPB), to explore the factors influencing transfer pricing optimization. Through a qualitative approach, employing a constructivist-interpretive paradigm, this research examines the interpretations of key actors involved in transfer pricing, including MNEs, tax consultants, and tax authorities. The study's three-layer unit analysis and NVivo software analysis reveal that transfer pricing is a normal business practice aimed at managerial and taxation purposes. Notably, Indonesian MNEs often lack awareness of national and international regulations and rely on tax consultants and internal and external factors to optimize transfer pricing. This study contributes to the literature on behavioural aspects of transfer pricing and provides practical implications for improving transfer pricing guidance to minimize related problems.