Investigating factors affecting tax avoidance based on the moderating role of corporate governance

The primary objective of this study is to examine and analyze the impact of profitability, leverage, institutional ownership, and capital intensity on tax avoidance practices, with corporate governance serving as a moderating variable. This research is focused on manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period 2020-2023, employing a purposive sampling technique to select companies that meet specific criteria. A total of 156 companies were selected, resulting in a comprehensive dataset of 624 observations over four years. The findings reveal that profitability exerts a significant positive influence on tax avoidance. In contrast, leverage has a significant negative effect. However, institutional ownership and capital intensity did not show a statistically significant impact on tax avoidance practices. Furthermore, the results demonstrate that corporate governance, particularly the presence of independent commissioners, weakens the positive relationship between profitability and tax avoidance. Nevertheless, corporate governance does not moderate the relationship between leverage and tax avoidance. The findings underscore the importance for companies, especially those with high profitability, to strengthen their governance structures to ensure alignment with regulatory compliance and transparency, thereby mitigating the risks associated with tax avoidance.