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

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.