Analysis of Profitability, Leverage, and Capital Intensity in Tax Avoidance Practice

Abstract

This study aims to empirically examine the influence of profitability, leverage, and capital intensity on tax avoidance practices  in energy sector companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2024 period. The windfall profit  phenomenon due to the global geopolitical crisis and post-pandemic recovery underlies the urgency of testing fiscal compliance behavior in this highly volatile sector. Through the purposive sampling method, a final sample of 99 observation units was obtained. Hypothesis testing was carried out by multiple linear regression analysis using IBM SPSS 27. The results of the partial analysis show that profitability has a negative and significant effect on tax avoidance. This indicates that when a company reaches an extreme level of profit, the push for political costs and public scrutiny forces the company to be more compliant in order to maintain the company's reputation. On the contrary, leverage has been shown to have a positive and significant effect on tax avoidance, confirming that the increase in the proportion of debt is used by management to optimize interest tax shields. Meanwhile, capital intensity has no significant effect on tax avoidance, indicating that fixed asset investment in the energy sector is oriented towards long-term operational needs and green infrastructure recapitalization, not fiscal manipulation instruments. Simultaneously, the three independent variables had a significant effect on tax avoidance with  an Adjusted R Square  value of 38.8%.