CSR as Moderator of Profitability’s Impact on Tax Avoidance

Abstract

This study investigates the effect of profitability (ROA) on tax avoidance (ETR) and the moderating role of corporate social responsibility (CSR), using 714 firm-year observations from 238 non-financial firms listed on the Indonesia Stock Exchange during 2022–2024. Employing Moderated Regression Analysis within a panel-data framework, the results reveal that profitability significantly increases tax avoidance, while CSR strengthens this relationship as a pure moderator. Firms appear to use CSR both to enhance reputation and to mitigate risks linked to tax-avoidance practices. Theoretically, the study extends agency and risk management perspectives by showing how CSR shifts from a reputational signal to an active moderator of tax behavior. Practically, the findings highlight the need for regulators, auditors, and investors to scrutinize high-CSR, high-profitability firms more closely and to align CSR-disclosure standards with tax-transparency requirements in Indonesia.