PENGATURAN PEMBEBANAN BUNGA UNTUK MENCEGAH PENGHINDARAN PAJAK

Abstract

The Regulation of Interest Deduction to Prevent Tax Avoidance. Taxpayers may use various strategies to avoid taxes, by exploiting loopholes on tax regulation, including interest deduction. Tax regulation usually provide provision  that interest payment is deductible expense for tax purpose. This provision then exploited by excessive debt in order to get more deductible expense so may reduce taxable income, and the final goal is to reduce tax payment. This study aims to identify the regulation of interest deduction in the Indonesian Income Tax Law and provide an alternative to prevent tax avoidance. The study is qualitative using literature study. Based on the results of the study it can be concluded that Indonesian Income tax regulation have been complemented by provision to prevent tax avoidanve by  limitation of interest deduction. Indonesia applies fix ratio approach and arm's length principle approach. Fix ratio used is debt to equity ratio (DER). Consideration should be given to alternative use interest to EBITDA ratio. The fix ratio approach based on Interest to EBITDA is better than DER, because it reflects the economic reality.