Determinants of Tax Avoidance in Indonesian Sharia-Listed Energy Companies

Abstract

This study aims to examine the influence of financial characteristics consisting of profitability, sales growth, capital intensity, and liquidity, as well as audit quality, on tax avoidance among energy sector companies listed on the Financial Services Authority’s (OJK) Sharia Securities List (DES) over the period of 2021-2025. Tax avoidance in this study is proxied using the Cash Effective Tax Rate (Cash ETR) developed by Dyreng et al. (2008). The inconsistent results from previous studies regarding the relationship between financial characteristics and tax avoidance behavior, as well as the limited number of studies specifically examining tax avoidance among companies listed on the OJK’s Sharia Securities List, serve as the primary motivation for this study. This study employs a quantitative approach using purposive sampling, resulting in a sample of 17 energy sector companies listed on the OJK’s Sharia Securities List, with a total of 85 observations over the 2021-2025 period. Data analysis was conducted using panel data regression with the Random Effects Model (REM), corrected using the Panel Corrected Standard Errors (PCSE), through EViews 14SV software. The results show that sales growth has a significant negative effect on tax avoidance, indicating that companies with high sales growth tend to optimize their tax liabilities to maximize internal cash flow for funding business expansion. Meanwhile, profitability, capital intensity, liquidity, and audit quality do not have a significant effect on tax avoidance.