BRIDGING ACCOUNTING AND TAX PERSPECTIVES IN TRANSFER PRICING: IMPLICATIONS FOR FINANCIAL PERFORMANCE AND TAX BASE PROTECTION IN INDONESIA

Abstract

The increasing integration of global business operations has intensified transfer pricing issues, not only as a tax compliance concern but also as a critical accounting matter affecting financial performance and reporting quality. In Indonesia, transfer pricing practices have contributed to tax base erosion while simultaneously influencing profit measurement, cost allocation, and intercompany transaction transparency in financial statements. This study examines transfer pricing through a combined accounting and tax perspective, emphasizing how transfer pricing policies shape reported profitability, managerial decision-making, and tax risk exposure. Using a qualitative doctrinal and analytical approach, this research reviews international tax principles, accounting standards, OECD Transfer Pricing Guidelines, and relevant Indonesian regulations, supported by recent empirical and institutional evidence. The findings indicate that misaligned transfer pricing policies distort financial performance indicators and weaken tax base protection, particularly in transactions involving intangibles, services, and intra-group royalties. This study highlights the importance of integrating accounting judgment with tax compliance in transfer pricing governance to enhance financial statement reliability and support sustainable tax administration. The paper contributes to accounting literature by positioning transfer pricing as a cross-disciplinary issue requiring coordinated accounting and tax oversight.