This study aims to investigate the effect of thin-capitalization on tax avoidance of non-Sharia Stock Indexed (non-ISSI) firms before and after the enactment of Minister of Finance Decree (PMK) number 169/PMK.010/2015 (PMK-169). The PMK-169 was issued at the end of 2015 by Indonesia government to limit the amount of debts of companies in certain industries resulting that non-ISSI companies are also subject to this rule. By conducting regression analysis of unbalanced panel data of 1064 firm-years during 2011-2016, it was found that the effect of thin-capitalization on non-ISSI’s tax avoidance was lower after the implementation of PMK-169 and became indifferent from ISSI firms after the adoption of PMK-169. Prior to PMK-169, the effect of thin-capitalization on tax avoidance was higher in non-ISSI firms as well as higher than ISSI firms. The implication of these findings is that PMK-169 as a thin-capitalization rule has been effective in reducing tax avoidance practices in Indonesia.