In everyday life, for example, we open a business branch in a location with a lower y ang tax rate and so on.  Likewise, in a company, the company avoids taxes by showing profits from operating activities as profit from capital, thereby reducing the company’s net profit and tax debt.  According to Elitawati (2018), there are several ways for companies to do tax avoidance such as (1) recognizing capital spending as operational expenditure and charging the same on net profit, thereby reducing corporate tax debt; (2) charge personal costs as business expenses, thereby reducing net profit; (3) due to excessive depreciation of production below the closing value of the equipment, thereby reducing taxable profits; (4) Record excessive disposal of raw materials in the manufacturing industry, thereby reducing taxable profits; (5) Maccelerate depreciation so that a large depreciation value is obtained. In financial statements, depreciation is one of the components that reduces income or operating profit which is used as the basis for calculating taxes.

The definition of tax avoidance  according  to experts as  follows tax avoidance is interpreted as  an effort made by taxpayers with the aim of finding loopholes in the law regarding taxation in order to get its weaknesses, so as to reduce its burden on taxation and pay a lower amount of tax. This tax avoidance is an effort to reduce tax obligations legally, which is done by looking for loopholes in tax provisions (Suandy, 2016).  Tax avoidance is all activities that have an impact on tax liabilities, including activities obtained and activities used to minimize tax burden (Pranoto, 2017).  Tax avoidance is an effort made by taxpayers to reduce the tax burden that must be borne by taking advantage of the weaknesses of laws and regulations (Ngadiman et al, 2014; Prasetyo, 2017).

According to Pohan (2013), tax  avoidance is an effort to streamline the tax burden  that  is carried out legally and safely for taxpayers without conflicting with applicable tax provisions (not contrary to the law), where the methods and techniques used tend to take advantage of the weaknesses (gray areas) contained in the law and  tax regulations themselves to reduce the amount of tax owed. Mardiasmo (2018) said that tax avoidance is an effort to ease the tax burden by not violating the law. Tax avoidance is a tax avoidance strategy and technique that is carried out legally and safely for taxpayers because it does not conflict with tax provisions. The  OECD describes tax avoidance as an effort made by taxpayers in reducing taxes owed.  Although this effort may not violate the law (the letter of the law), it is actually contrary to the purpose of making tax laws and regulations (the spirit of the law).  Tax avoidance is a way to avoid legal tax payments made by taxpayers by reducing the amount of tax owed without violating tax regulations or in other terms looking for regulatory weaknesses (Hutagaol, 2007).

James Kessler defines tax avoidance as efforts made by taxpayers to minimize taxes in a way that is contrary to the intent and purpose of the lawmakers. Robert H. Anderson: Tax avoidance is a way of reducing taxes that are still within the limits of tax legislation and can be justified primarily through tax planning. Ernest R. Mortense: Tax avoidance is concerned with arranging an event in such a way as to minimize or eliminate the tax burden by taking into account the presence or absence of tax consequences it causes. Tax avoidance does not constitute a violation of tax legislation and is ethically not considered wrong in the context of the taxpayer’s efforts to reduce, avoid, minimize, and  ease the tax  burden in the manner permitted by tax law. Harry Graham Balter: Tax avoidance means an undertaking by a taxpayer whether or not it succeeds to reduce or completely eliminate tax debt that does not violate the provisions of tax legislation.


  • Agusti, W. Y. (2014) ‘The Effect of Profitability, Leverage, and Corporate Governance on Tax Avoidance (Empirical Study on Manufacturing Companies Listed on the IDX 2009-2012)’, Journal of Accounting, 2(3), pp. 1–32.
  • Agustina, T. N. and Aris, M. A. (2017) ‘Tax Avoidance: Factors Affecting It (Empirical Study of Manufacturing Companies Listed on the Indonesia Stock Exchange for the Period 2012-2015)’, National Seminar and The 4th Call for Syariah Paper, pp. 295–307. Available at:
  • Alviyani, Surya, R. A. S. and Rofika (2016) ‘The Effect of Corporate Governance, Executive Character, Company Size, and Leverage on Tax Avoidance (Study on Agricultural and Mining Companies Listed on the IDX 2011-2014’, Student Online Journal (JOM) of the Faculty of Economics, 3(1). Available at:
  • Annisa, N. A., and L. K. (2012) ‘The Effect of Corporate Governance on Tax Avoidance’, Indonesian Journal of Accounting & Auditing, 8(2), pp. 95–189.  Armstrong, C. S. et al. (2015) ‘Corporate governance, incentives, and tax avoidance’, Journal of Accounting and Economics, 60(1), pp. 1–17. doi: 10.1016/j.jacceco.2015.02.003.

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