This study examines the relationship between tax avoidance actions and the cost of debt capital through the moderating effects of corporate governance (family ownership, the ultimate owner, the second-largest shareholder, and the effectiveness of the board, and audit committee) for companies on the Indonesian Stock Exchange between 2008-2012. Using the methodology of panel data, the results show that tax avoidance has a positive relationship with the cost of debt capital. Furthermore, it is found that concentrated ownership strengthens the relationship between tax avoidance and the cost of debt, while the existence of second-largest owners weakens the relationship. Even though this study cannot prove that family ownership and the effectiveness of the company’s board commissioners and audit committee have any impact on the tax avoidance and cost of debt relationship, it provides future research with a better insight into the role of a company’s shareholders on its tax compliance. This study is one of the first that questions the role of a firm’s ultimate shareholder and its second-largest shareholder based on the relationship between tax avoidance and the cost of debt.