<![CDATA[Corporate tax avoidance has long been a continuous issue in Indonesia, where government revenue is heavily reliant on tax revenue. For firms, financial distress is one of the critical issues faced because it may eventually lead to bankruptcy risk if left unresolved. Because tax avoidance strategies carry inherent risks, these practices may potentially serve as a key determinant of financial distress. Therefore, extending prior research, this research aims to examine the effect of corporate tax avoidance on financial distress. This study utilizes secondary data from 2019 to 2023 extracted from the audited financial statements of listed firms within the consumer cyclical sector, analyzed using a panel data regression approach. The results show that corporate tax avoidance increases financial distress because tax avoidance itself embeds risks through tax audits and penalties and agency costs. Further analysis of the coronavirus pandemic demonstrates that corporate tax avoidance does not affect financial distress because firms focus on survival. Theoretically, this study extends the existing literature by shifting the focus from the immediate cash-flow benefits of tax avoidance to its potential financial consequences. Practically, this research serves as a strategic framework for corporate managers, emphasizing that tax avoidance practices must not compromise organizational sustainability.]]>
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