This study aims to examine the relationship between corporate tax avoidance and debt level using Chinese listed firms as a sample. This study also examines to what extent the types of business affect the relationship between tax avoidance and debt level. Furthermore, this study examines how legal environment which the headquarters of the companies locate affects the relationship between tax avoidance and debt level. The empirical results show that debt level is significantly lower for firms with higher extent of tax avoidance. The empirical results also indicate that the types of business do not significantly affect the relationship between tax avoidance and debt level. In addition, the results show that the legal environment has no significant impact on the relation between tax avoidance and the debt level.