Does Political Connections, Thin Capitalisation, Capital Intensity, and Profitability have an Effect on Tax Avoidance?

Abstract

Taxes are the main source of state revenue to finance development and public welfare. However, tax avoidance practices by companies can reduce potential state revenue. This research is urgently needed to understand the factors that drive companies to engage in tax avoidance. This research aims to analyse the effect of political connections, thin capitalisation, capital intensity, and profitability on tax avoidance in mining companies, particularly those in the energy sub-sector listed on the Indonesia Stock Exchange during the period 2021-2023. This study uses a descriptive quantitative method. The data type is secondary data, namely annual financial reports obtained from the companies' official websites and the Indonesia Stock Exchange. The sampling technique used propositional sampling, resulting in 24 companies with a total of 72 samples. The analysis technique used multiple linear regression using SPSS 25 software. The results show that political connections, thin capitalisation, capital intensity, and profitability influence tax avoidance in mining companies in the energy sub-sector. The implications of this research are expected to contribute to accounting and taxation literature by adding empirical evidence regarding the factors that influence tax avoidance practices, and emphasising the need for increased tax compliance as a form of corporate contribution to 
national development.