The Effect of Profitability, Leverage, and Sales Growth on Tax Avoidance in Mining Companies Listed on the Indonesia Stock Exchange for the 2023–2024 Period

Abstract

This study examines the effect of profitability, leverage, and sales growth on tax avoidance among mining companies listed on the Indonesia Stock Exchange during 2023–2024. Tax avoidance is proxied by the Effective Tax Rate (ETR); consequently, a higher ETR indicates a lower tendency toward tax avoidance. The population comprises 182 firm-year units formed by 91 energy-sector companies observed over two years. Using simple random sampling and the Isaac–Michael table at a 5% error level, 119 firm-year observations were selected. Secondary financial-statement data were analyzed with ordinary least squares multiple regression in IBM SPSS Statistics 25. The mean ETR is 0.16924, while the means of return on assets (ROA), debt to asset ratio (DAR), and sales growth are 0.07298, 0.39649, and 0.02229, respectively. The estimated model is ETR = 0.063 + 0.537ROA + 0.171DAR − 0.011SG. Profitability is positively associated with ETR (t = 3.701; p < 0.001), and leverage is also positively associated with ETR (t = 2.366; p = 0.020). These positive ETR coefficients imply lower—not higher—tax avoidance as profitability and leverage increase. Sales growth is not significant (t = −0.197; p = 0.844). The model is jointly significant, F(3,115) = 4.870, p = 0.003, but its explanatory power is limited (R² = 0.113; adjusted R² = 0.090). Residual normality and multicollinearity diagnostics are acceptable; however, the Glejser test indicates heteroskedasticity for DAR (p = 0.046), so inferential conclusions should be interpreted cautiously and verified using heteroskedasticity-robust standard errors. The findings suggest that tax outcomes in Indonesian mining companies cannot be inferred from sales expansion alone and remain substantially influenced by factors outside the model.