THE FINANCIAL PUZZLE OF TAX AVOIDANCE: INSIGHTS FROM PROFITABILITY, LEVERAGE, ASSET INTENSITY AND SALES GROWTH

Tax revenue is a crucial component in financing national development, particularly in infrastructure, healthcare, and education sectors. However, the effectiveness of tax collection in Indonesia is hindered by the widespread practice of tax avoidance. Tax avoidance, although legal, reduces the state's tax revenue and poses a challenge to the government's fiscal policies. This study examines the impact of profitability, leverage, fixed asset intensity, and sales growth on tax avoidance among mining companies listed on the Indonesia Stock Exchange (IDX) from 2021 to 2022. Using a quantitative approach with panel data regression analysis, this study aims to provide empirical evidence regarding corporate tax behavior in Indonesia. The findings indicate that profitability and leverage significantly influence tax avoidance, whereas fixed asset intensity and sales growth exhibit mixed effects. The results align with agency and legitimacy theories, suggesting that firms engage in tax avoidance to optimize financial performance while maintaining stakeholder legitimacy. These findings contribute to the literature on corporate tax strategies and offer practical insights for policymakers in designing tax regulations that minimize loopholes for aggressive tax avoidance. Strengthening tax governance and ensuring stricter enforcement mechanisms are recommended to enhance tax compliance among corporations.