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This study aims to examine the contingent fit between business strategy and environmental uncertainty, and its effect on Corporate Tax Avoidance. Using data from Indonesian listed companies for the period from 2009 to 2012, this study finds that under highly uncertain conditions, the probability of companies favoring prospector strategy is higher than the probability of choosing analyzer strategy. The study fails, however, to demonstrate that the probability of a firm choosing the defender strategy is higher than the probability of selecting analyzer strategy. The study also finds that companies inclined to pursue the prospector strategy under highly uncertain conditions (contingent fit between prospector strategy and environmental uncertainty) have a higher level of tax avoidance than that of the analyzer and defender strategies. Moreover, in a highly uncertain environment, the defender strategy precipitates a lower level of tax avoidance than the analyzer strategy. Furthermore, the study also finds that environmental uncertainty has a significant and positive correlation with the level of tax avoidance. Therefore, the findings suggest that a strategy choice that fits with environmental uncertainty could affect the level of corporate tax avoidance.

Business Strategy; Contingent Fit; Corporate Tax Avoidance; Environmental Uncertainty