Tax Incentives, Leverage, and Profitability Effects On Tax Avoidance Through Accounting

Abstract

This research investigates the effect of tax incentives, leverage, and profitability on tax avoidance, with accounting conservatism considered as a mediating factor. The study focuses on non-financial firms listed on the Indonesia Stock Exchange (IDX) during 2020–2025, applying a purposive sampling technique. The findings reveal that tax incentives positively influence both accounting conservatism and tax avoidance. However, accounting conservatism does not significantly affect tax avoidance and therefore does not function as a mediating variable. In addition, leverage and profitability negatively affect accounting conservatism but show no significant impact on tax avoidance. Overall, the results suggest that tax avoidance behavior is driven more by external factors, namely tax incentive policies, than by internal company characteristics. Practically, this highlights the importance of stricter oversight and regulation to ensure that tax incentives are not misused to promote excessive tax avoidance