The effect of profitability and capital intensity on tax avoidance in consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange during 2021–2024

Authors

  • Raphajirsy Berthveight Akerina Sam Ratulangi University
  • Lintje Kalangi Sam Ratulangi University
  • Anneke Wangkar Sam Ratulangi University

DOI:

https://doi.org/10.58784/cfabr.494

Keywords:

profitability, capital intensity, tax avoidance, return on assets, effective tax rate, capital intensity ratio

Abstract

Tax avoidance is a company's effort to legally minimize its tax burden by exploiting loopholes in the prevailing tax regulations. Tax avoidance practices can be influenced by various internal factors, including profitability and capital intensity. Profitability reflects a company's ability to generate profit, while capital intensity indicates the extent of investment in fixed assets that may generate depreciation expenses as a deduction from taxable income. This study aims to analyze the effect of profitability and capital intensity on tax avoidance in consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange (IDX) during 2021–2024. Tax avoidance is proxied by the Effective Tax Rate (ETR), profitability by Return on Assets (ROA), and capital intensity by the Capital Intensity Ratio (CIR). The study employs a quantitative causal-associative approach with multiple linear regression. Using purposive sampling, 39 firms were selected, yielding 156 firm-year observations. The results show that profitability has a significant effect on tax avoidance (t = -4.417; Sig. < 0.001), whereas capital intensity has no significant effect (t = 0.638; Sig. = 0.524). The Adjusted R² of 0.114 indicates that both variables jointly explain 11.4% of the variation in tax avoidance. These findings indicate that a company's profit level can influence its tendency toward tax avoidance, while the magnitude of fixed-asset investment does not directly influence tax avoidance among consumer non-cyclicals companies in Indonesia.

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Published

2026-09-14

How to Cite

Akerina, R. B., Kalangi, L., & Wangkar, A. (2026). The effect of profitability and capital intensity on tax avoidance in consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange during 2021–2024. The Contrarian : Finance, Accounting, and Business Research, 5(2), 234–242. https://doi.org/10.58784/cfabr.494

Issue

Vol. 5 No. 2 (2026)

Section

Articles

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Copyright (c) 2026 Raphajirsy Berthveight Akerina, Lintje Kalangi, Anneke Wangkar

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