This study explores how the tax avoidance in Bangladesh is influenced by some board characteristics such

expertise of board and audit quality, with moderating impact of political connection with board. Using panel

data on the banking industry listed on the DSE from 2012 to 2022, the study runs several regressions to

investigate whether political connections moderate the board experts. The results revealed that both legal experts

and audit quality negatively impact tax avoidance. It indicates that the presence of more legal experts on the

board and the greater the use of BIG4 auditors in a firm, the lower their engagement in tax avoidance practices.

Accounting experts on the board, conversely, enhance tax avoidance. Similarly, politicians on the board

moderate the legal experts and weaken the legal expert’s role regarding tax avoidance decisions. The findings

imply that politicians increase tax avoidance by converting the negative role of legal experts into a positive one.

Due to corporate tax avoidance, many governments are under pressure to provide smooth public services, which

affects smooth public services and demotivates law-abiding taxpayers to pay taxes (Rashid et al., 2024). The

root of tax avoidance often lies in the financial struggles of low-income countries, affecting approximately 21%

of developing nations compared to 11% of their developed counterparts (Gulzar et al., 2018). According to the

State of Tax Justice 2020 report, tax avoidance by businesses and private citizens costs Bangladesh an estimated

$703 million annually. This substantial loss accounts for almost 3.5% of tax revenue of Bangladesh (Star, 2020).

The government of Bangladesh has failed to achieve tax revenue targets to date due to tax avoidance and

reluctance of individuals to pay taxes. Though nearly 40% of income tax comes from corporations, the tax

collection process is not flawless. In Bangladesh, the National Board of Revenue (NBR) filed 1838 court cases

governance since the interests of owners are involved there (Armstrong et al., 2015). Among the corporate

governance components, board experts and audits play a large role in strategic decision-making like tax

avoidance. Boards with financial and legal experts are crucial to tax management since their area of expertise

includes tax practices. Accounting experts enhance the reliability of information disclosure processes (Al‐Shaer

& Zaman, 2018) and the reporting quality of financial information (Kusnadi et al., 2016), which subsequently

holds a desired impact on tax management. On the other hand, legal experts are skilled enough to help ensure

regulatory compliance by the companies (Lombardi et al., 2019), which might allow the firm to properly comply

with tax laws. Additionally, legal experts play a positive role in controlling tax avoidance since they minimize

information asymmetry among firms and other stakeholders (Masud et al., 2019). Audit quality, another indicator

of good governance, plays a critical role in controlling tax avoidance. The presence of high-quality auditors

The study has been conducted in Bangladesh, for several reasons. First, Bangladesh a potential emerging

economy but has bad reputation of weak investor protection, low-quality governance, controlled press, and

absence of financial transparency (Muttakin et al., 2015). Second, the study is conducted in the banking industry,

the most stable intuitions for generating consistent profit, are subject to paying 37.5% corporate tax (GOB, 2021).

For ensuring macroeconomic growth of a country, stability in banking sector is mandatory(Rashid et al., 2020).

But in recent times, the contribution of banking sector in this country is decreasing(Rashid et al. 2024).

Bangladesh Bureau of Statistics (BBS) reported that, banks contribution in GDP is reduced by 6.5% (BBS,

2022). In Bangladesh, most banks have to fucus on improving key financial indicators (Zheng et al., 2022).

Again, high corporate tax rate demonstrates an honest tax mindset in this industry that is supportive of the

success. In the ninth parliament (2009–2013), for instance, businessmen made up 57% of elected MPs; in the

tenth, eleventh, and twelfth parliaments, their proportions were 59%, 61.07%, and 66.89%, respectively (Rashid

& Hossain, 2022; Tribune, 2024). The MPs are also called lawmakers. Despite their increasing number in trend,

the lawmakers are found to be involved in tax avoidance (Rashid et al., 2024). Moreover, they have the intention

of violating laws to get benefits from government affiliation (Muttakin et al., 2018). Such an intention negatively

affects the compliance of legal experts. Under the lawmakers’ surveillance, how the accounting and legal experts

as well as auditors play their role regarding tax strategy in the banking industry is yet to be examined. Therefore,

the study aims to investigate the following research questions:

RQ1: What roles do the board expertise and audit quality play regarding tax avoidance decisions?

management decisions. In this regard, the results revealed that the higher the accounting experts on a company

board, the greater the tax avoidance. But, legal experts on the board lower the firm's tax avoidance as they tax

reduction strategies as a risky activity that could enhance reputation risk and reduce cognizant consumers

creating a tax burden on the citizens. Second, the paper explores whether the political members on the corporate

board can moderate the role of legal experts in tax avoidance practices. The findings of the study indicates that

the interaction of the effect of political board members and legal experts on the board are positively corelated

with tax avoidance. The results imply that politician directors weaken the legal board members’ role regarding

tax avoidance practices. Third, the study explores to what extent audit quality can impact tax avoidance. This

research finds that audit quality (BIG4) plays a significant role in reducing tax avoidance as external auditors

are qualified, ethical and independent to work. Fourth, we investigated whether legal and accounting experts'

owners held a large portion of the shares of a company. Fifth, the outcomes of the study gives policymakers,

bank owners, and other stakeholders a valuable insight into the influence of good governance on firms' tax

avoidance decisions. Finally, limited research in developing countries like Bangladesh extends the debate on the

Different theories explain the impact of CG on tax practices from different perspectives. The prominent theory

of agency claims that tax avoidance is a strategic outcome of an implied or actual employment deed between

owners and managers (Lee, Dobiyanski, & Minton, 2015). Contractual agents get compensation for reducing tax

liability (Chen & Chu, 2005). Such efforts may sometimes compromise the integrity of the internal control

system of a firm. It could be promising for managers to gain personal benefits by compromising the interest of

shareholders (Desai & Dharmapala, 2006). Tax avoidance is likely to result when managers get the opportunity

to manipulate accounting methods due to information asymmetry between principals and agents (Alkurdi &

Mardini, 2020). Corporate governance assists firms in aligning the interests of owners with management, which

could control such agency problems (Richardson et al., 2016). Strong corporate governance practices result in

accounting conservatism, which plays a prevalent role in controlling agency problems (Garcia Lara et al., 2009).

Moreover, based on the principal-agent model, tax practice relies on many interests to satisfy both concerns of

different stakeholders(Kovermann & Velte, 2019). Ownership structure might keep remarkable impact on a

company's tax decision (Richardson et al., 2016). To be more precise, institutional ownership is a crucial

corporate governance system that monitors managers' actions to lessen agency issues (Dakhli, 2022; Khan &

Nuryanah, 2023; Richardson et al., 2016). Institutional investors also have control over the board of directors in

terms of tax decisions (Alkurdi & Mardini, 2020; Minh Ha et al., 2022). Similarly, Murni, Sudarmaji, and

Sugihyanti (2016) referred to tax avoidance as a practice of internal management in the shelter of owners,

institutional and managerial owners can control this practice.

al., 2015). Board members having expertise in the accounting field are worthy of tax management since they

could play a crucial role in monitoring management (Taylor & Richardson, 2014) and ensuring improvement in

financial reporting, which is a prerequisite of corporate governance (Parker, 2007). A financially transparent

board with accounting and financial experts can also effectively monitor the company's practices (Armstrong et

al., 2015). Moreover, financial experts in audit committees and board members from outside or independent

play a crucial advisory role in enforcing desired tax planning (Hsu et al., 2018). Risky tax planning is expected

to be minimized due to the presence of accounting experts on corporate boards (Armstrong et al., 2015). Rashid

et al. (2020) documented that a firm’s accounting experts always focus on its profitability instead of

sustainability. In other words, they are continually looking to maximize the company’s profit. Though many

researchers tried to identify the impact of accounting experts on tax avoidance, none of them focused on the

The BODs, consisting of legal experts, play a tremendous role to comply rules and regulations (Litov et al.,

2013). People with legal training who can handle delicate political, social, and environmental performance with

avoidance is a type of corruption and breakdown of tax laws, this study assumes the negative influence of legal

Though legal experts play a positive role in controlling tax avoidance, such a role is likely to be limited due to

the political affiliations of board members. Tax avoidance is likely to have more if the board has political tie(Ajili

& Khlif, 2020). The firm having such a connection could get easy access to debt by issuing bond by ignoring

the need of disclosing financial information, which keeps the tax managers free of fear of consequences of such

detrimental tax practices (Kim & Zhang, 2016).Agreesive tax practices is positively related to political

connections as such connection works as a insurance in any bad consequences to be faced by regulatory

bodies(Duchin & Sosyura, 2012; Young et al., 2001). Developing countries are considered to have minimum

level of accountability and transparency due to presence of political affiliation. (Masud et al., 2022; Muttakin

et al., 2018). In tax planning, the presence of political directors limits the role of expert board members like

lawyers (Chen et al., 2021). In Bangladesh, a country with high corruption, political affiliation influences legal

Audit quality(AQ) has been considered a pivotal determinant of good corporate tax practices. AQ plays a positive

role in controlling aggressive tax practices since external auditors are entitled to work independently

(Christensen & Murphy, 2004). A quality audit refers to an audit based on Professional Public Accounting

Standards (Lestari & Nedya, 2019). Studies investigating the impact of audit quality on tax avoidance identified

a negative relationship (Lestari & Nedya, 2019). Audit quality reduces tax avoidance as it monitors managers

not to engage in malpractices (Jihene & Moez, 2019). Audit quality controls agency costs by controlling tax

avoidance (Langli & Willekens, 2017). The tax aggressiveness is likely to be reduced due to the presence of

competent component auditors in group audits (Kim et al., 2021).

of financial information (Rashid, & Hossain, 2022) and minimizes managerial fraud (Carcello et al., 2009). Audit

quality is positively related to quality financial reporting due to its contribution to ethical disclosure (Persons,

2009) and monitoring functions (Mangena & Pike, 2005). Audits by reputed auditors like BIG4 firms help to

Table 1 presents that the average tax avoidance (GETR and CETR) is -0.46 within the range of -0.87 to 0.01,

indicating that the majority of the Bangladeshi banks are not involved in tax avoidance behaviour. A few banks

have legal experts as their mean value is 0.37, and all firms keep at least an accounting expert on their board.

However, the legal experts and accounting experts vary among firms as their standard deviation is higher than

their mean value. 42% of banks prepare their financial statements by the BIG4 companies, while 27% of banks

adopts GRI to make reports of sutainability. The results hint that most of the firms do not maintain audit quality

and international standards. The study shows strong presence of political connection as 31% bank are affiliated

with political connection. The majority of the firms have large board sizes as the average board size of

Bangladeshi banks is 14 and ranges between 6 to 22. Among the board of directors, independent, female and

with legal experts and BIG4, indicating higher the legal experts and audit quality, the lower the tax avoidance

by firms. Moreover, firm size, age, and foreign directors have shown negative correlations with tax avoidance.

On the other hand, a negative correlation is evident between political connections and advertising expenses. No

multicollinearity problem is detected, as the highest correlation coefficient (0.515) between firm size and firm

age is below the threshold of 0.90 (Black et al., 2010). In addition, the study employs the variance inflation factor

(VIF) to further assess multicollinearity. The results presented in Table 3 indicate that all VIF values are below

the conventional cutoff of 10, confirming that the model is free from multicollinearity issues.

p < 0.10,

p < 0.05,

p < 0.01

p < 0.10,

p < 0.05,

p < 0.01

The study examines the effects of board expertise and audit quality on corporate tax avoidance, as well as the

moderating role of politically connected directors, using the regression results presented in Table 3. The study

uses GETR, CETR, and BTD to indicate tax avoidance. Under all three measurements of tax avoidance, the

study provides almost similar results that prove the robustness of the findings.

First, the accounting experts have positively impacted GETR, CETR, and BTD. The results indicate that the

negatively associated with the all-out risks of firms (Liu & Sun, 2021), they are risk-averse when making

decisions on tax planning. They believed tax avoidance is a risky endeavour that could reduce cognizant

consumers and produce a tax burden on the citizens. Legal experts, in this case, play the role of whistle-blowers

and prevent aggressive tax avoidance practices (Litov et al., 2013). Furthermore, audit quality (BIG4) is

significantly associated with lower levels of tax avoidance, indicating that firms audited by Big Four audit firms

are less involved in tax avoidance practices. This result supports the findings of prior studies (Lestari & Nedya,

2019). As the BIG4 auditors are more qualified, ethical and independent to work, their proper and active audit

ensures quality reporting of financial information and control of managerial frauds (Carcello et al., 2009). They

attempt to retrain firms from aggressive tax engagement.

stronger financial performance are more likely to engage in tax avoidance activities. However, the study found

an insignificant effect of board size, independent directors, female directors, foreign directors, and political

connections on tax avoidance. Similarly, the study found no significant impact of firm size, leverage, advertising

expense, cash flow, and firm age on tax avoidance.