The main purpose of this article is to evaluate the effect of markup and corporate governance on tax avoidance of the listed companies in the Tehran stock exchange. For this purpose, data from 100 active manufacturing firms over the periods of 2011-2019 were used. The results indicate that the managers of the firms which have market power are not worried about reducing profits because of being in a safe hedge and the immunities against their rivals.Also, the managers for having the payment rewards and shareholders’ incentive schemes,  try to maximize the wealth and worth of the firm and increase tax avoidance drastically. Moreover, the results of the corporate governance indicate that institutional investors, due to the high financial benefits of investing and achieving market power, will have a higher motivation to monitor the managers’ activity to reduce agency costs and increase tax avoidance. Overall, managers and shareholders try to increase tax avoidance by reducing benefits conflicts.