This study aims to observe the relationship between corporate tax avoidance and level of debt by empirical method, and public companies in Taiwan date from 2006 to 2012 were selected as sample. In this model, permanent book-tax differences is used as the proxy for corporate tax avoidance and companies’ debt ratio as the dependent variable. The results show that companies engaged in tax avoidance actively have lower debt ratio than other ones with other factors unchanged. The results support the perspective that substitution effect exists between non-tax shields and interests expenses.