The Illomata International Journal of Management Ilomata International Journal of Tax & Accounting P-ISSN: 2714-9838; E-ISSN: 2714-9846 Volume 4, Issue 4, October 2023 Page No. 813-831 813 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Khairul Azwar1, Elly Susanti2, Supitriyani3 123Sekolah Tinggi Ilmu Ekonomi Sultan Agung, Indonesia Correspondent : khairulazwar513@gmail.com1 Received : August 8, 2023 Accepted : October 19, 2023 Published : October 31, 2023 Citation: Azwar, K., Susanti, E., Supitriyani (2023). Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange. Ilomata International Journal of Tax and Accounting, 4(4), 813-831. https://doi.org/10.52728/ijtc.v4i4.896 ABSTRACT: Taxes are the main source of revenue in the State Budget (APBN) which accounted for 73% of all state revenue in 2019. Taxes have such an important role in sustaining the continuity of government and development. However, realized tax receipts never reached the target level between 2009 and 2020.This is because there are companies that carry out tax avoidance actions. The purpose of this study is to specifically analyze the variables that affect tax evasion in the LQ45 index companies of the Indonesian Stock Exchange. This research was conducted during the period 2017 –2022. The sampling technique used in this study is purposive sampling, in which criteria are determined based on the variables studied. The data analysis technique used is multiple simple linear regression analysis and a residual test for moderating variables. The F-test results show that institutional ownership, sales growth and Ln_total assets have a positive and insignificant effect on tax evasion. T-test results show that institutional ownership and sales growth have a negative and insignificant effect on tax evasion. However, Ln- Total_Asset has a negative and significant effect on tax evasion. Keywords: GCG, Sales Growth, Firm Size, Financial Performance, Tax Avoidance This is an open access article under the CC-BY 4.0 license. INTRODUCTION In a country, taxes become one of the revenues that have a very large contribution to the development of the country. However, in reality, the realization of tax revenue has never reached the targeted figure since 2009 - 2020. The Government of Indonesia has made various efforts so that tax revenues can achieve the targets launched by implementing tax incentive policies (Ardhi & Lubis, 2023; Nugraha & Wijaya, 2023; Rulandari & Rahmayani, 2023). However, this policy is used as an opportunity for companies as a loophole in carrying out tax avoidance practices (Anwar & Wijaya, 2023; Wibawa & Tobing, 2023). Based on the tax justice network report, Indonesia is expected to face losses of US $ 4.86 billion per year or equivalent to Rp68.7 trillion due to tax avoidance. The loss is caused by corporate taxpayers who engage in tax avoidance in Indonesia https://www.ilomata.org/index.php/ijtc mailto:khairulazwar513@gmail.com https://doi.org/10.52728/ijtc.v4i4.896 Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 814 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc (Herman & Chaidir, 2023; Lestari & Fauzi, 2023; Mwenda et al., 2023). Based on information from the Ministry of Finance of the Republic of Indonesia, there were fluctuations in the realization of tax revenues to the tax revenue target in 2017-2022. The purpose and realization of tax revenue is given in Table 1. Table 1. Target and Realization of Tax Revenue in Indonesia (in trillion rupiah) Years Target tax recipients Realization of tax recipients Tax achievement (%0 2017 1.283,5 1.151,1 89,4% 2018 1.424,0 1.315,9 92,41 2019 1.577,5 1.332,0 84,44 2020 1.198,8 1.069,9 89,25 2021 1.229,6 1.231,8 100,19 2022 1.485,0 1.716,8 115,60 Source : (Www.kemenkeu.go.id, 2023) Based on Table 1, the realization of tax revenues in 2018 - 2020 was not realized according to the target of tax revenue. In 2019, the realization of tax receipts did not reach the target set by the government. This condition is caused by one of the companies in Indonesia, namely PT. Adaro Energy Tbk, which is suspected of tax avoidance practices by conducting transfer pricing carried out in 2019. Where, PT. Adaro Energy Tbk, has paid taxes of Rp1.75 trillion or US$125 million less than the amount it should have paid in Indonesia. In 2020, the realization of tax revenue decreased drastically by 19.6% from the previous year. This is due to the practice of tax avoidance during the Covid-19 pandemic has increased, resulting in decreased state tax revenue during 2020. The problem formulation of this study is whether GCG, sales growth and firm size affect tax evasion and the effect of financial performance on tax evasion as mediators of GCG, sales growth and firm size. The novelty of the present study is profitability as a moderating variable, whereas in the previous study the moderating variable was firm size. METHOD Research Design This study is a quantitative study that includes a type of causality study, namely studies that aim to determine the effect between two or more variables. The scope of this study is limited to tax evasion. In this study, the type of relationship is causal because it seeks to find the causal relationship (effect) of the independent variable (X) with the dependent/related variable (Y). https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 815 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Time and Location of Research The research period used is 5 years, from 2017 to 2022. This study uses up to date data so that it is expected to be able to describe current conditions that are more relevant to the research year. This study was conducted on LQ45 company in Indonesia Stock Exchange. Variable Operational Definition The denpendent variable (Y) in this study is tax avoidance: πΆπ‘Žπ‘ β„Ž 𝐸𝑓𝑓𝑒𝑐𝑑𝑖𝑣𝑒 π‘‡π‘Žπ‘₯ π‘…π‘Žπ‘‘π‘’ = Tax Payment Profit Before Tax Independent Variable (X) GCG as measured by Institutional Ownership (IP) Institutional Ownership (IP) = Number of institutional shares π‘π‘’π‘šπ‘π‘’π‘Ÿ π‘œπ‘“ π‘ β„Žπ‘Žπ‘Ÿπ‘’π‘  π‘œπ‘’π‘‘π‘ π‘‘π‘Žπ‘›π‘‘π‘–π‘›π‘” π‘₯ 100% Sales Growth π‘†π‘Žπ‘™π‘’π‘  πΊπ‘Ÿπ‘œπ‘€π‘‘β„Ž = 𝑛𝑒𝑑 π‘ π‘Žπ‘™π‘’π‘ π‘‘ βˆ’ 𝑛𝑒𝑑 π‘ π‘Žπ‘™π‘’π‘ π‘‘βˆ’1 𝑛𝑒𝑑 π‘ π‘Žπ‘™π‘’π‘ π‘‘βˆ’1 Firm Size is proxied by: Financial Performance which is the ratio of profitability by proxy: π‘…π‘’π‘‘π‘’π‘Ÿπ‘› 𝑂𝑛 𝐴𝑠𝑠𝑒𝑑 = Profit After Tax Total Assets Population and Sample The main population of this study is all LQ45 companies in Indonesia Stock Exchange from 2017 - 2022, which is 67 populations which can be shown in table 2. https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 816 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Table 2 List of Study Populations Source: (Idx.co.id, 2022) https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 817 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc In this study, the sampling technique is purposive sampling based on the criteria given in Table 3. Table 3 List of Research Sample Criteria Source : (Data processed, 2023) Based on Table 3 there are 22 companies in the study sample whose data are presented in Table 4. Table 4. Research Sample No Issuer Code Company Name 1 ADRO PT Adro Energy Indonesia,Tbk 2 AKRA PT AKR Corporindo,Tbk 3 ANTM PT Aneka Tambang,Tbk 4 ASII PT Astra International,Tbk 5 BSDE PT Bumi Serpong Damai,Tbk 6 EXCL PT XL Axiata,Tbk 7 GGRM PT Gudang Garam,Tbk 8 HMSP PT Hanjaya Mandala Sampoerna,Tbk 9 ICBP PT Indofood CBP Sukser Makmur,Tbk 10 INCO PT Vale Indonesia,Tbk 11 INDF PT Indofood Sukses Makmur,Tbk 12 INTP PT Indocement Tunggal Perkasa,Tbk 13 JSMR PT Jasa Marga,Tbk 14 KLBF PT Kalbe Farma,Tbk 15 PGAS PT Perusahaan Gas Negara,Tbk 16 PTBA PT Tambang Batubara Bukit Asam,Tbk 17 PTPP PT Pembangunan Perumahan (Persero),Tbk 18 SMGR PT Semen Indonesia (Persero),Tbk 19 TLKM PT Telekomunikasi Indonesia,Tbk 20 UNTR PT United Tractors,Tbk 21 UNVR PT Unilever Indonesia,Tbk https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 818 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc 22 WIKA PT Wijaya Karya (Persero),Tbk Source : (Data processed, 2023) Data Types and Data Sources The data used is secondary data from the IDX website, the details of which are given in Table 5. Table 5 Types of Research Data and Data Sources Variable Data analyzed Data sources GCG (KI) Number of institutional shares and number of outstanding shares for the period 2017-2022 Indonesia Stock Exchange and Financial Statements Sales Growth Net Salest – Net salest-1 for the period 2017-2022 Indonesia Stock Exchange and Financial Statements Firm Size Total assets for the period 2017- 2022 Indonesia Stock Exchange and Financial Statements Financial Performance (ROA) Net Profit After Tax and Total Assets for the 2017-2022 Period Indonesia Stock Exchange and Financial Statements Tax Avoidance Payment of tax and profit before tax for the period 2017-2022 Indonesia Stock Exchange and Financial Statements Source : (Data processed, 2023) Data Analysis Techniques 1. The classical assumption test is performed to assess whether an Ordinary Least Squares (OLS) linear regression model has classical assumption problems. Normality, multicollinearity, autocorrelation and heteroskedasticity tests were used in this study. 2. Test the correlation coefficient (r) and determination (Adjusted R Square), used to measure how much ability all independent variables have in explaining their dependent variables (Ghozali, 2016). 3. First hypothesis testing 1) A simultaneous significance test (F-test) is performed to show whether all the independent variables simultaneously or together have a significant effect on the dependent variable. When using an alpha of 5%, the test criterion is Sig. of Ξ±, then reject H0. This means that simultaneously GCG, sales growth and firm size have a significant impact on tax evasion and vice versa. 2) An individual significance test (T-test) is performed to show whether individual or partially independent variables have a significant effect on the dependent variable. When using an alpha of 5% or 0.05, the test criterion is whether the Sig. of Ξ±, then reject H0. This means that GCG, sales growth and firm size significantly affect tax evasion and vice versa. 4. Testing the Second Hypothesis In this study, the residual test is used to test the second hypothesis. The residual test is performed by transferring the dependent variable to the absolute value of the residual regression of the independent variable on the hypothesized variable as a moderating variable. https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 819 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc If the regression results are significant and the regression coefficient is negative, it can be concluded that the variable hypothesized as a moderating variable is actually capable of regulating the relationship between the independent variable and the dependent variable. With the residual model, the regression equation can be formulated as follows: M = a + b1X1 + b2X2 + e.................................... (Suliyanto, 2011) Η€eΗ€ = a + b1 Y The criteria in the residual test include: 1) If the significance of ≀ 0.05, then H0 is rejected, meaning that financial performance is able to moderate the effect of GCG, sales growth and firm size on tax avoidance. 2) If the significance > 0.05, then H0 is accepted, meaning that financial performance is unable to moderate the effect of GCG, sales growth and firm size on tax avoidance. RESULT AND DISCUSSION Test Classical Assumptions Before Transformation 1) Normality Test Table 6 Normality Test Results One-Sample Kolmogorov-Smirnov Test KI SG Ln_Tota l_Aset ROA TA N 132 132 132 132 132 Normal Parametersa,b Mean 6207.1515 15 1312.9621 21 317291.5 75758 878.363636 5598.393939 Std. Deviation 1235.6266 666 3589.7639 196 7693.639 5304 889.3797159 8916.0957958 Most Extreme Differences Absolute .129 .186 .171 .171 .274 Positive .129 .186 .171 .171 .274 Negative -.098 -.168 -.138 -.138 -.253 Kolmogorov-Smirnov Z 1.487 2.133 .815 1.965 3.151 Asymp. Sig. (2-tailed) .024 .000 .520 .001 .001 Source : (Data processed, 2023) From Table 6, it is explained that the variable of managerial ownership has a value of 0.024, sales growth is 0.000, return on assets is 0.001, and tax evasion is 0.001, which shows that the value is lower at Ξ± = 0.05, while Ln_total. assets is higher at Ξ± = 0.05, namely 0.520, so it can be concluded that the data is not normally distributed. https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 820 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc 2) Multicollinearity Test Table 7 Multicollinearity Test Model Collinearity Statistics Tolerance VIF 1 (Constant) KI .918 1.089 SG .994 1.006 Ln_Total_Aset .923 1.083 Source : (Data processed, 2023) From table 7, it can be concluded from Table 7 that the tolerance value of each variable is greater than 0.1, namely 0.918 (institutional ownership), 0.994 (sales growth) and 0.923 (Ln_total assets). In addition, the VIF value of each research variable shows that it is less than 10, namely 1.089 (institutional ownership), 1.006 (sales growth), and 1.083 (Ln_total assets). Thus, it can be concluded that this study did not show multicollinearity. 3) Heteroscedasticity Test Source : (Data processed, 2023) Figure 1 Heteroscedasticity Test If you look at figure 1, the points are not randomly distributed and do not form a specific pattern, so this regression model has a heteroskedasticity problem. https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 821 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc 4) Autocorrelation Test Table 8 Autocorrelation Test Results Model R R Square Adjusted R Square Std. Error of the Estimate Durbin- Watson 1 .229a .052 .030 8780.1624103 2.181 Source : (Data processed, 2023) From the results of table 8 provides information that du < d < 4 - du or 1.7624 < 2.181 < 2.2376 deciding that there is no positive or negative autocorrelation does not reject the conclusion. 1. Test Classical Assumptions After Transformation 1) Normality Test Table 9 Normality Test Results One-Sample Kolmogorov-Smirnov Test Unstandardized Residual N 101 Normal Parametersa,b Mean .0000000 Std. Deviation .70692951 Most Extreme Differences Absolute .113 Positive .076 Negative -.113 Kolmogorov-Smirnov Z 1.138 Asymp. Sig. (2-tailed) .150 Source : (Data processed, 2023) From table 9 it is explained that the value of Asymp. Sig. (2 tailed) is at 0.150 which is greater Ξ± = 0.05 so that the data is normally distributed. https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 822 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc 2) Multicollinearity Test Table 10 Multicollinearity Test Model Collinearity Statistics Tolerance VIF 1 (Constant) Ln_Kepemilikan_Institusional .902 1.109 Ln_Sales_Growth .973 1.027 Ln_Total_Aset .922 1.084 Source : (Data processed, 2023) From table 10, it can be concluded that the tolerance value for each variable is greater than 0.1, namely 0.902 (institutional ownership), 0.973 (sales growth), and 0.922 (asset Ln_total). Furthermore, the VIF value of each research variable shows smaller than 10, namely 1,109 (institutional ownership), 1,027 (sales growth), and 1,084 (Ln_total assets). So it can be concluded that this study did not occur multicollinearity. 3) Heteroscedasticity Test Source : (Data processed, 2023) Figure 2 Heteroscedasticity Test https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 823 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc If you look at figure 2 that the dots spread randomly above or below the zero number and do not show a certain pattern. So that this regression model does not occur heteroscedasticity problems. 4) Autocorrelation Test Table 11 Autocorrelation Test Results Model R R Square Adjusted R Square Std. Error of the Estimate Durbin- Watson 1 .260a .067 .039 .83482 2.031 Source : (Data processed, 2023) From the results of table 11, provides information that du < d < 4 - du or 1.7624< 2.031< 2.2376 so that with the decision There is no positive or negative autocorrelation with conclusions not rejected. 2. Analysis of Correlation Coefficient (r) and Correlation of Determination (R) Table 12 Results of Correlation Coefficient and Coefficient of Determination Analysis Model R R Square Adjusted R Square Std. Error of the Estimate 1 .260a .067 .039 .83482 Source : (Data processed, 2023) From table 12, the result of the R correlation coefficient value of 0.260 is obtained, which means that there is a low correlation between the tax avoidance variable and the independent variables of institutional ownership, sales growth, and asset Ln_total. While the value of the coefficient of determination (R Square) of 0.067 which means 6.7% high and low tax avoidance can be explained by institutional ownership, sales growth, and Ln_total asset while the remaining 93.3% is influenced by other factors that were not included in this study. 3. Test the First Hypothesis 1) Simultaneous Test (Test F) Table 13. F Test Results ANOVAa `1Model Sum of Squares Df Mean Square F Sig. 1 Regression 4.887 3 1.629 2.338 .078b Residual 67.601 97 .697 Total 72.488 100 a. Dependent Variable: Ln_Tax_Avoidance b. Predictors: (Constant), Ln_Ukuran_Perusahaan, Ln_Sales_Growth, Source : (Data processed, 2023) https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 824 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Based on table 13, it is known that the Fcount value is 2.338 while Ftable with df = (132-3-1=128) is 2.68. It can be concluded that Fcount < Ftable or 2.338 > 2.68 or significance level 0.078 > 0.05 then H0 is rejected, meaning that institutional ownership, sales growth, and Ln_total assethave a positive and insignificant effect on tax avoidance. 2) Partial Test (Test t) Table 14. Test Results t Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 107.622 46.391 2.320 .022 Ln_Kepemilikan_Institusio nal -.893 .468 -.197 -1.908 .059 Ln_Sales_Growth -.090 .069 -.130 -1.307 .194 Ln_Total_Aset -7.190 3.557 -.206 -2.022 .046 Source : (Data processed, 2023) Based on table 14, for each t-test result can be described as follows: (1) The calculated value of institutional ownership is -1.908 while the ttable with df = (132-3=129) is 1.97852. It can be concluded that tcount < ttable or -1.908 > 1.97852 or significance level 0.059 > 0.05 then H0 is accepted, meaning that institutional ownership has a negative and insignificant effect on tax evasion. (2) The calculated value of sales growth is -1.307 while the ttable with df = (132-3=129) is 1.97852. It can be concluded that tcount < ttable or -1.307 < 1.97852 or a significance level of 0.194 > 0.05 then H0 is accepted, meaning that sales growth has a negative and insignificant effect on tax avoidance. (3) The calculated value of Ln-Total_Aset is -2.022 while the ttable with df = (132-3=129) is 1.97852. It can be concluded that t count > ttable or -2.022 > 1.97852 or a significance level of 0.046 < 0.05 then H0 is rejected, meaning that Ln-Total_Aset has a negative and significant effect on tax evasion. https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 825 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc 4. Test the Second Hypothesis Table 15 Regression Analysis with Moderating Variables with Residual Test Model Unstandardized Coefficients Standardized Coefficients B Std. Error Beta 1 (Constant) 61.515 65.631 Ln_Kepemilikan_Institusion al .686 .662 .109 Ln_Sales_Growth -.030 .097 -.032 Ln_Total_Aset -4.807 5.031 -.100 Source : (Data processed, 2023) Based on Table 15, the multiple linear regression equation model obtained is: M = 61.515 + 0.686X1 - 0.030X2 - 4.807X3 This means that institutional ownership has a positive effect on tax evasion, while the sales growth and Ln_total assets has a negative effect on the financial performance (ROA) of the company LQ45 in the Indonesian stock market. Furthermore, Table 16 is presented, the results of the ABS_Residual test on LQ45 Companies on the Indonesia Stock Exchange. Table 16 Moderating Variable Analysis with ABS_Residual test Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) .595 .727 .818 .415 Ln_Tax_Avoidance .031 .089 .033 .343 .733 Source : (Data processed, 2023) Based on Table 16, the linear regression equation model with moderating variables using ABS_residual test is: ABS_RES = 0.595+ 0.031Y This means that the value of the regression coefficient is 0.031 and the significance level is 0.733. Because the regression coefficient is positive and insignificant, it can be concluded that financial performance (ROA) is not a moderating variable because it is unable to strengthen or weaken the influence of institutional ownership, sales growth, and Ln_total asseton tax evasion. The Effect of Institutional Ownership on Tax Avoidance The calculated value of institutional ownership is -1.908 while the table with df = (132-3=129) is 1.97852. It can be concluded that t count < ttable or -1.908 > 1.97852 or significance level 0.059 > https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 826 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc 0.05 then H0 is accepted, meaning that institutional ownership has a negative and insignificant effect on tax evasion. This means that there will be more ownership in the company, the smaller the company will take tax avoidance actions because the company will maintain the good name of the company with the aim that stakeholders believe in the progress of the company in the future. In addition, according to (Charisma & Dwimulyani, 2019), the size or size of institutional ownership affects companies or management to minimize tax evasion practices. Institutional ownership will always supervise and encourage management to do its duties correctly and convey true information so that the company can increase its profits. This study is inconsistent with the study (Kristiani et al., 2020) with the results of research that institutional ownership (INST) has a significant effect on tax evasion (ETR). The greater the share ownership of institutions, the greater the opportunity to reduce corporate tax avoidance practices. These results suggest that these governance characteristics have a stronger association with more extreme tax avoidance, which is more likely a symptom of managerial over- and under-investment (Armstrong et al., 2015). The Effect of Sales Growth on Tax Avoidance The results of the previous analysis show that the calculated sales growth value was -1.307 while the table with df = (132-3=129) was 1.97852. It can be concluded that t count < ttable or -1.307 < 1.97852 or a significance level of 0.194 > 0.05 then H0 is accepted, meaning that sales growth has a negative and insignificant effect on tax evasion. This means that with increasing sales, the company will not do tax evasion with the aim of being able to contribute to management that the company has good performance. This study is inconsistent with the study (Ainniyya et al., 2021), (Suryani, 2021) and (Suteja et al., 2022) by obtaining the results that sales growth significantly affects tax evasion in nature, this means that high sales growth indicates an increase in tax avoidance rates, so that sales growth has a positive effect on tax evasion. Changes in the value of company sales will directly change profits so that it will also affect the amount of tax. High growth requires new investment and funding, so companies will have more options to achieve low ETR. The results of this study are consistent with studies (Putri et al., 2021) and (Sembiring & Sa’adah, 2021) which states that sales growth and tax evasion have a significant negative influence. The Effect of Firm Size on Tax Avoidance Based on the study of the analysis that the calculated value of Ln-Total_Aset is -2.022 while the ttable with df = (132-3=129) is 1.97852. It can be concluded that t count > ttable or -2.022 > 1.97852 or a significance level of 0.046 < 0.05 then H0 is rejected, meaning that Ln-Total_Aset has a negative and significant effect on tax evasion. This means that if the company has a lot of assets, it will illustrate a high company size so that the tax evasion action taken by the company is lower. Conversely, the smaller the value of the size of the company, the more it will have an impact on increasing the amount of tax avoidance. This research showed that size, significantly affected tax avoidance practices (Pratama, 2017), (Richie & Triyani, 2021) and (Adegbite & Bojuwon, 2019). In contrast to research (Aulia & Mahpudin, 2020) with the result that the larger the total assets indicate the larger the size of the company, and each increase in company size will increase tax avoidance. The results (Firmansyah & Bahri, 2022) showed that sales growth and company size did not affect tax avoidance. This is possible because large companies are able to manage taxation by doing tax planning so that optimal tax saving can be achieved. In this case, tax saving describes https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 827 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc tax avoidance that companies do in a legal way. This study is consistent with research (Sunarsih et al., 2019) and (Rinaldi & Cheisviyanny, 2015) The research results show that the company size variable has a significant negative effect on tax evasion. The Effect of Managerial Ownership, Sales Growth, and Company Size on Tax Avoidance From the results that the Fcalculate value is 2.338 while Ftable with df = (132-3-1=128) is 2.68. It can be concluded that Fcalculate < Ftable or 2.338 > 2.68 or significance level 0.078 > 0.05 then H0 is rejected, meaning that institutional ownership, sales growth, and Ln_total assethave a positive and insignificant effect on tax avoidance. This means that when the number of shares owned by institutions increases, the level of management control is tightened, which prevents tax evasion. However, companies that experience increased sales growth are likely to carry out tax avoidance with the aim that the tax burden is paid with a small amount. In addition, the size of the company cannot influence the company to take tax avoidance actions because the company must maintain the company's good name for the continuity of business development in the future. This research is not in line with research (Prastiyanti & Mahardhika, 2022) showing that management ownership and firm size have significant effects on tax evasion. In addition, research (Wahyuni & Wahyudi, 2021) shows differences with this study, according to the results of this study, company size and sales growth do not affect tax evasion. Our additional regression results demonstrate that corporate governance controls related to board independence, institutional ownership and the use of BIG-4 auditors are significantly negatively associated with firms using capital-intensive tax avoidance structures. (Taylor & Richardson, 2013). Financial Performance (ROA) Moderates the Effect of Managerial Ownership, Sales Growth, and Company Size on Tax Avoidance Based on the results of the analysis presented in Table 16, the linear regression equation model with moderating variables using the ABS_residual test is: ABS_RES = 0.595+ 0.031Y This means that the value of the regression coefficient is 0.031 and the significance level is 0.733. Because the regression coefficient is positive and insignificant, it can be concluded that financial performance (ROA) is not a moderating variable because it is unable to strengthen or weaken the influence of institutional ownership, sales growth, and Ln_total asseton tax evasion. This means that with the increase in company profits proxied by ROA, it gives an idea that companies that have institutional ownership with a large number of shares and increased sales growth and large size of ownership do not necessarily take tax avoidance measures. This research is different from the results of research (Manik & Darmansyah, 2022), (Sunarto et al., 2021) and (Mu’minah et al., 2023) That the moderating variable, i.e. profitability, is able to slow down the effect of liquidity, sales growth and financial leverage on tax evasion, because profitability is the profit belonging to taxpayers, which of course also affects the amount of the taxpayers tend to avoid and So is research (Sunarto et al., 2021) https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 828 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc CONCLUSION Based on the results of the analysis, the author concludes that the institutional ownership variable has a negative and insignificant effect on partial tax evasion. This means that the more shares ownership in the company, the smaller the company will take tax avoidance actions because the company will maintain the good name of the company with the aim that stakeholders believe in the progress of the company in the future. Research (2) notes that the higher the share of institutional ownership, the lower the tax avoidance efforts of the company. Fluctuating sales growth has a negative and insignificant effect on partial tax evasion. This means that with increasing sales, the company will not do tax avoidance with the aim of being able to contribute to management that the company has good performance. The variable Ln-Total_Aset has a negative and significant effect on tax avoidance partially. That is, if a company has many assets, it indicates a large size of the company, in which case the company's tax avoidance measures are less. On the other hand, the smaller the value of firm size, the greater the effect on the amount of tax evasion. Institutional ownership, sales growth, and Ln_total assethave a positive and insignificant effect on tax avoidance simultaneously. This means that with the increase in the number of institutional ownership shares, the tighter level of supervision of management so as to prevent tax avoidance actions. However, companies experiencing sales growth avoid taxes by trying to pay a small portion of the tax burden. In addition, the size of the company cannot influence the company to take tax avoidance actions because the company must maintain the company's good name for the continuity of business development in the future. Financial performance (ROA) is not a moderating variable because it cannot strengthen or weaken the effects of institutional ownership, sales growth and Ln_total value tax avoidance. This is because it cannot strengthen or weaken the effects of institutional ownership, sales growth and asset tax avoidance.. This means that with the increase in company profits proxied by ROA, it gives an idea that companies that have institutional ownership with a large number of shares and increased sales growth and large size of ownership do not necessarily take tax avoidance measures. REFERENCE Adegbite, T. A., & Bojuwon, M. (2019). Corporate Tax Avoidance Practices: An Empirical Evidence From Nigerian Firms. Studia Universitatis BabeΘ™-Bolyai Oeconomica, 64(3), 39–53. https://doi.org/10.2478/subboec-2019-0014 Ainniyya, S. M., Sumiati, A., & Susanti, S. (2021). Pengaruh Leverage, Pertumbuhan Penjualan, dan Ukuran Perusahaan Terhadap Tax Avoidance. Owner: Riset & Jurnal Akuntansi, 5(2), 525– 535. https://doi.org/https://doi.org/10.33395/owner.v5i2.453 Anwar, F. M., & Wijaya, S. (2023). Tax Revenue, FDI, and Agricultural Sector: A Dynamic Interaction with Regulatory Quality as the Moderation. Ilomata International Journal of Tax and Accounting, 4(3), 524–545. https://doi.org/10.52728/IJTC.V4I3.799 Ardhi, F., & Lubis, A. W. (2023). The Moderation Role of Tax Rate Reduction and Firm Size on the Effects of Tax Aggressiveness on Company Value. Ilomata International Journal of Tax and Accounting, 4(3), 451–469. https://doi.org/10.52728/IJTC.V4I3.777 https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 829 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate governance, Incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1–17. https://doi.org/https://doi.org/10.1016/j.jacceco.2015.02.003 Aulia, I., & Mahpudin, E. (2020). Pengaruh profitabilitas, leverage, dan ukuran perusahaan terhadap tax avoidance. Akuntabel: Jurnal Akutansi Dan Keuangan, 17(2), 289–300. https://doi.org/https://doi.org/10.30872/jakt.v17i2.7981 Charisma, R. B., & Dwimulyani, S. (2019). Pengaruh Struktur Kepemilikan Terhadap Tindakan Penghindaran Pajak Dengan Kualitas Audit Sebagai Variabel Moderating. Seminar Nasional Pakar 2019 Buku II, 2.11.1-2.11.8. https://doi.org/https://doi.org/10.25105/pakar.v0i0.4308 Firmansyah, M. Y., & Bahri, S. (2022). Pengaruh Leverage, Capital Intensity, Sales Growth, dan Ukuran Perusahaan terhadap Tax Avoidance. Jurnal Penelitian Dan Pengembangan Sains Dan Humaniora, 6(3), 430–439. https://doi.org/https://doi.org/10.23887/jppsh.v6i3.53401 Ghozali, I. (2016). Aplikasi Analisis Multivariete Dengan Program IBM SPSS 23 (Edisi 8). Badan Penerbit Universitas Diponegoro. Herman, & Chaidir, R. (2023). The Influence of Operating Cash Flows, Investments Cash Flow, and Funding Cash Flow on the Company Value in Technology Sector. Ilomata International Journal of Tax and Accounting, 4(3), 546–560. https://doi.org/10.52728/IJTC.V4I3.780 Idx.co.id. (2022). Laporan Keuangan dan Tahunan. Kristiani, N. T., Artinah, B., & Supriyadi. (2020). Analisis Faktor-Faktor Yang Memengaruhi Tax Avoidance Pada Perusahaan Sektor Pertambangan Yang Terdaftar Di Bursa Efek Indonesia. Jurnal Manajemen Dan Akuntansi, 21(1), 33–44. Lestari, T. U., & Fauzi, M. N. (2023). The Effects of Ownership Concentration, Company Size, and Profitability on Internet Financial Reporting. Ilomata International Journal of Tax and Accounting, 4(3), 438–450. https://doi.org/10.52728/IJTC.V4I3.760 Manik, J., & Darmansyah. (2022). Determinan Penghindaran Pajak dengan Profitabilitas Sebagai Pemoderasi pada Perusahaan Manufaktur. JRAP (Jurnal Riset Akuntansi Dan Perpajakan), 9(2), 146–158. https://doi.org/https://doi.org/10.35838/jrap.2022.009.02.12 Mu’minah, L. L., Kristiana, I., & Hanum, A. N. (2023). The Role of Profitability in Moderating Political Connections, Corporate Risk, Leverage and Firm Size to Tax Avoidance. Journal of Accounting Science (JAS), 7(1), 33–46. https://doi.org/https://doi.org/10.21070/jas.v7i1.1681 Mwenda, B., Ngollo, M., & Mwasota, A. (2023). An Empirical Study on the Effects of Managerial Competence on Firm Profitability. Ilomata International Journal of Tax and Accounting, 4(3), 491– 507. https://doi.org/10.52728/IJTC.V4I3.794 Nugraha, H. T., & Wijaya, S. (2023). The Determinants of Tax Revenue in the Context of International Transactions in the Latin America and Caribbean (LAC) Regions 2002-2019. Ilomata International Journal of Tax and Accounting, 4(3), 613–627. https://doi.org/10.52728/IJTC.V4I3.843 https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 830 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Prastiyanti, S., & Mahardhika, A. S. (2022). Analisis Pengaruh Kepemilikan Manajerial, Firm Size, dan Profitabilitas Terhadap Tindakan Tax Avoidance. JIMMBAβ€―: Jurnal Ilmiah Mahasiswa Manajemen, Bisnis Dan Akuntansi, 4(4), 513–526. https://doi.org/https://doi.org/10.32639/jimmba.v4i4.136 Pratama, A. (2017). Company Characteristics, Corporate Governance and Aggressive Tax Avoidance Practice: A Study of Indonesian Companies. Review of Integrative Business and Economics Research, 6(4), 70–81. Putri, S. A., Widiastuti, N. P. E., & Simorangkir, P. (2021). Pengaruh Good Corporate Governance Dan Sales Growth Terhadap Tax Avoidance. Prosiding BIEMA Business Management, Economic, and Accounting National Seminar, 396 – 412. Richie, & Triyani, Y. (2021). Pengaruh Ukuran Perusahaan, Leverage, Sales Growth, Dan Umur Perusahaan Terhadap Tax Avoidance. Jurnal Akuntansi, 10(1), 45–56. https://doi.org/https://doi.org/10.46806/ja.v12i1.911 Rinaldi, & Cheisviyanny, C. (2015). Pengaruh Profitabilitas, Ukuran Perusahaan Dan Kompensasi Rugi Fiskal Terhadap Tax Avoidance (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di BEI Tahun 2010-2013). Seminar Nasional Ekonomi Manajemen Dan Akuntansi (SNEMA) Fakultas Ekonomi Universitas Negeri Padang, 472–483. Rulandari, N., & Rahmayani, S. (2023). The Effect of Changes in Layers of Taxable Income Article 17 of the Law on Cost of Goods Sold, Reporting of Individual Tax Returns and Taxpayer Awareness of Income Tax Receipt at the Pratama Sawah Besar One Tax Service Office. Ilomata International Journal of Tax and Accounting, 4(3), 407–437. https://doi.org/10.52728/IJTC.V4I3.861 Sembiring, S. S., & Sa’adah, L. (2021). Pengaruh Ukuran Perusahaan, Profitabilitas, Dan Pertumbuhan Penjualan Terhadap Tax Avoidance. Jurnal Manajemen Dirgantara, 14(2), 188– 195. https://doi.org/https://doi.org/10.56521/manajemen-dirgantara.v14i2.283 Suliyanto. (2011). Ekonometrika dan Terapan, Teori dan Aplikasi dengan SPSS. CV Andi Offset. Sunarsih, S., Haryono, S., & Yahya, F. (2019). Pengaruh Profitabilitas, Leverage, Corporate Governance, dan Ukuran Perusahaan Terhadap Tax Avoidance (Studi Kasus Pada Perusahaan Yang Tercatat Di Jakarta Islamic Index Tahun 2012-2016). INFERENSIβ€―: Jurnal Penelitian Sosial Keagamaan, 13(1), 1–16. Sunarto, S., Widjaja, B., & Oktaviani, R. M. (2021). The Effect of Corporate Governance on Tax Avoidance: The Role of Profitability as a Mediating Variable. Journal of Asian Finance, Economics and Business, 8(3), 0217–0227. https://doi.org/https://doi.org/10.13106/jafeb.2021.vol8.no3.0217 Suryani. (2021). Pengaruh Profitabilitas, Ukuran Perusahaan, Pertumbuhan Penjualan Dan Kualitas Audit Terhadap Tax Avoidance. Jurnal Akuntansi Dan Keuangan, 10(1), 19–36. https://doi.org/http://dx.doi.org/10.36080/jak.v10i1.1428 Suteja, S. M., Firmansyah, A., Sofyan, V. V., & Trisnawati, E. (2022). Ukuran Perusahaan, Pertumbuhan Penjualan, Penghindaran Pajak: Bagaimana Peran Tanggung Jawab Sosial https://www.ilomata.org/index.php/ijtc Financial Performance as a Mediation of Tax Avoidance Determinants in LQ45 Companies on the Indonesia Stock Exchange Azwar, Susanti, and Supitriyani 831 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Perusahaan? Jurnal Pajak Indonesia (JPI), 6(2), 436–445. https://doi.org/https://doi.org/10.31092/jpi.v6i2.1833 Taylor, G., & Richardson, G. (2013). The determinants of thinly capitalized tax avoidance structures: Evidence from Australian firms. Journal of International Accounting, Auditing and Taxation (JIAAT), 22(1), 12–25. https://doi.org/https://doi.org/10.1016/j.intaccaudtax.2013.02.005 Wahyuni, T., & Wahyudi, D. (2021). Pengaruh Profitabilitas, Leverage, Ukuran Perusahaan, Sales Growth, dan Kualitas Audit Terhadap Tax Avoidance. KOMPAKβ€―: Jurnal Ilmiah Komputerisasi Akuntansi, 14(2), 394–403. https://doi.org/https://doi.org/10.51903/kompak.v14i2.569 Wibawa, A. T., & Tobing, A. N. L. (2023). Maturity Level of Fraud Risk Management in Tax Institutions in Indonesia. Ilomata International Journal of Tax and Accounting, 4(3), 584–598. https://doi.org/10.52728/IJTC.V4I3.765 https://www.ilomata.org/index.php/ijtc