The Impact of Thin Capitalization on Effective Tax Rate of Companies Listed on Indonesia Stock Exchange in 2009-2017
The Impact of Thin Capitalization on Effective Tax Rate of Companies Listed on Indonesia Stock Exchange in 2009-2017

Summary/Abstract: This article elaborates the impact of debt-to-equity ratio policy, which is effective from Fiscal Year 2016, on effective tax rate of companies listed on Indonesia Stock Exchange (IDX) from 2009 to 2017. This study will try to find out whether debt-to-equity ratio policy can change company’s debt ratio and company’s effective tax rate or not. It will also try to find out the impact of debt-to-equity on effective tax rate in general. In this study, descriptive quantitative design was employed. The study result shows that there is no significant change in debt-to-equity ratio or effective tax rate after the implementation of debt-to-equity ratio policy. Moreover, it is found out that debt-to-equity ratio does not have significant impact on effective tax rate.

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