Journal of Economics, Finance and Management Studies ISSN (print): 2644-0490, ISSN (online): 2644-0504 Volume 07 Issue 01 January 2024 Article DOI: 10.47191/jefms/v7-i1-07, Impact Factor: 7.144 Page No: 54-63 JEFMS, Volume 07 Issue 01 January 2024 www.Ijefm.co.in Page 54 Does Capital Intensity and Corporate Social Responsibility Influence of Tax Aggressiveness? The Role of Corporate Governance as Moderator Eva Herianti 1 , Amor Marundha 2 1 Universitas Muhammadiyah Jakarta, Indonesia. 2 Universitas Bhayangkara Jakarta Raya, Indonesia. ABSTRACT: This study examines the effect of capital intensity and corporate social responsibility (CSR) on tax aggressiveness, with a focus on the moderating role of the audit committee in the context of corporate governance. Using purposive sampling, data from 88 basic industry and chemical sub-sector firms listed on the Indonesian Stock Exchange for 2018-2021 were analysed through panel data regression. Findings reveal a significant negative association between capital intensity and tax aggressiveness, while CSR exhibits a positive and significant effect. Additionally, the audit committee was identified as a moderator, influencing the relationship between capital intensity, CSR, and tax aggressiveness. This contributes to tax aggressiveness literature, offering empirical insights into upper echelon theory, aiding shareholders in informed investment decisions. However, the study's limitation lies in exclusively employing GAAP ETR for tax aggressiveness measurement, impacting result generalizability. KEYWORDS: Capital Intensity, Corporate Social Responsibility, Corporate Governance, Tax Aggressiveness I. INTRODUCTION The term tax aggressiveness has been used in several literatures to describe company activities aimed at explicitly reducing taxes [1], [2]. Tax aggressiveness is defined as a series of problems faced by all taxation systems, especially for countries that impose higher tax rates. This high tax rate could possibly lead the higher incentives for motivations to pay lesser taxes. Taxpayers and the government generally have differing interests, which can lead to the tax payment process not being able to run well. This is due to a misconception about tax collection, where companies, as taxpayers, consistently strive to minimize the tax burden they bear. It stated that high tax rates prompt taxpayers to take tax aggressiveness action. It aims to reduce the tax burden through tax aggressiveness or tax planning [3]. On the other hand, this tax authorities strive to increase the corporate tax revenue through high tax rates [4]. Tax aggressiveness action has two types, namely tax avoidance and tax evasion. In order to minimize taxes, companies can exploit loopholes in the tax laws [5] [6]. When the company pays higher taxes, it results in increased government revenue from the taxation sector. Conversely, for the company, taxes represent obligatory expenses that diminish the net profit it accrues. In 2020, tax revenue experienced a decline of 16,9% compared to the previous year, which typically grew by 7.4% per year. However, from 2021 to 2022, tax performance improved and reached the target, albeit still below pre-pandemic levels [7]. The low level of tax revenue is caused by many companies seeking ways to pay less tax. This results in many companies attempting to reduce the tax costs they owe to the country. As a result, it is likely that companies will employ aggressive strategies in managing their taxes, including manipulate taxable income, both legally and illegally. This includes acts of aggressive tax evasion [8]; [9]. PT. Adaro Energy Tbk in 2019, was allegedly involved in tax avoidance practice. They are allegedly of doing this by reducing tax payment obligations related to buying and selling transactions. The method they used is transferring significant profits from Indonesia to a low-tax or tax-free countries. As a result, the company only paid taxes amounting to US$ 125 million, much less than what should have been paid [10]. The main benefit that companies obtain when conducting tax aggressiveness is an explicit reduction in taxes owed to the government and this will further increase the company's profitability [11]. This higher profit can be useful for funding