This study empirically examines how differences in institutional quality and legal enforcement across countries affect the relationship between corporate tax avoidance and firm value. While tax avoidance can serve as a strategic means to enhance firm value by increasing after-tax cash flows, it may also have adverse effects by exacerbating financial opacity and agency costs. Using 50,491 firm-year observations from 27 countries over the period 2011–2022, the results indicate that tax avoidance positively contributes to firm value in countries with robust institutional quality and rigorous legal enforcement. Conversely, in countries with weaker institutional frameworks and limited enforcement capacity, tax avoidance is associated with a negative effect on firm value. In particular, for Korea, where institutional quality and legal enforcement remain relatively limited, efforts to strengthen investor protection and corporate governance should accompany tax policy reforms to maximize the effectiveness of tax policy.