Abstract
This study evaluated the effect of corporate tax planning on the financial performance of Quoted food and beverages firms in Nigeria, with a population comprising 15 quoted food and beverages firms on the Nigerian Stock Exchange for ten years between 2008-2018, forming the sample using total enumeration sampling method. The study employed ex-post facto research design. The validity and reliability of the instruments were based on the statutory audit of the financial statement and approval for use by the regulator. The data were analysed using descriptive and influential statistics. From the analysis done, it has shown that corporate tax planning variables of effective tax rate, capital intensity, thin capitalization do not have a significant positive effect on financial performance of a quoted food and beverages firm in Nigeria Adjusted R2= 0.069: F-statistic (input)=8.81, p= 0.0383 0.05). All proxies of corporate tax planning practices have a significant positive effect on return on assets of the industry (Adjusted R2= 0.1095: F-statistic 37.76, p= 0.000 0.05). Similarly, the result shows all proxies of corporate tax planning practices do not have a significant positive effect on earnings per share of the food and beverages industry (Adjusted R2= 0.068: F-statistic 1.34, p= 0.2639>0.05). Thus, the research concluded that corporate tax planning proxies of effective tax rate, capital intensity and thin capitalisation, has a significant positive effect on the performance of quoted food and beverages firms in Nigeria.
Highlights
The financial performance of business organization worldwide has elicited concerns from both academicians and professionals especially in the foods and beverages industry of most economies
Considering financial performance of manufacturing firms in Nigeria, the major challenge of food and beverages firms come in a midst of high corporate tax rates, poor tax planning and multiples of other taxes that lead to high effective tax rates far above the statutory company income tax rate adversely affect firm profitability, liquidity, returns and asset tangibility
Research Question Main Model: What is the impact of corporate tax planning on the financial performance of quoted foods and beverages firm in Nigeria? Research Hypothesis Main Model: Corporate tax planning does not have significant effect on financial performance of quoted food and beverages firms in Nigeria
Summary
The financial performance of business organization worldwide has elicited concerns from both academicians and professionals especially in the foods and beverages industry of most economies. Considering financial performance of manufacturing firms in Nigeria, the major challenge of food and beverages firms come in a midst of high corporate tax rates, poor tax planning and multiples of other taxes that lead to high effective tax rates far above the statutory company income tax rate adversely affect firm profitability, liquidity, returns and asset tangibility. With the introduction of the information technology tax, there are about forty different taxes levied on food and beverages companies which hinder companies return on asset, liquidity and return on capital employed [7, 36] Many of these taxes from the different levels of government overlap and are forcefully extracted from corporate organizations profitability. Based on these identified issues of poor tax planning among food and beverages firm in Nigeria, this study will investigate the effect of tax planning dimensions (effective tax rate, capital intensity and firm size) on financial performance of quoted food and beverages firm in Nigeria
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