Navigating the Grey Zones: What Drives Multinational Tax Avoidance in Indonesia
Raden Roro Diana Atika Ghozali (1), Rissa Anandita (2), Naila Hanum (3), Widya Puja Wiryana (4)

Diponegoro University

Abstract

This literature review aims to systematically explore the findings of prior research examining the factors influencing profit shifting and tax avoidance practices by companies in Indonesia. Drawing on an analysis of nine core articles (Kundelis et al., 2022- Hendayana et al., 2024- Saragih & Ali, 2022, 2023- Itan et al., 2024- Solikhah et al., 2024- Rudyanto & Pirzada, 2025- Firmansyah et al., 2022), the existing literature has identified several key factors contributing to this phenomenon, including profitability, leverage, managerial capability, implementation of XBRL information technology, political connections, and sustainability reporting. However, the findings from prior research continue to exhibit significant inconsistencies, particularly regarding the influence of profitability and the implementation of XBRL technology. This lack of consistency underscores the urgent need for further synthesis to gain a deeper understanding of the underlying causes of these varying results. This literature review presents a critical analysis that aids in formulating recommendations for tax authorities to develop clear and effective policies, as well as providing strategic guidance for future research endeavors.

Keywords: profit shifting, tax avoidance, profitability, corporate governance, Indonesia, XBRL

Topic: Taxation