Panel Data Analysis on Corporate Effective Tax Rates of Some Listed Large Firms in Nigeria

Samuel Olorunfemi Adams,Philomena Omoshade Balogun

doi:10.21601/djfm/9345

Samuel Olorunfemi Adams, Philomena Omoshade Balogun

Open Access

https://doi.org/10.21601/djfm/9345

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Abstract

Corporate effective tax rates (ETR) of large Nigerian listed firms during the new tax regime as well as the influence of firm size, leverage, return on asset, capital intensity, and inventory intensity on corporate effective tax rate was investigated. The study aims to examine the influence of some corporate tax attributes in some selected large public listed firms within and across Nigeria with avoidance of corporate effective tax rates (ETR). The data used in the study was extracted from the 2019 Nigeria Annual Financial reports. The data were collected from the period 2012 to 2018, the period where Nigeria imposed a new tax regime on the current year assessment system (effective from the year 2012). Pooled ordinary least square (POLS), fixed effect and random effect regression were applied to the data, findings from the study revealed that the random effect regression model was preferred for result interpretation. It was also discovered that; firm size (FSIZE), return on assets (ROA), and inventory intensity (INVINT) have a positive and significant influence on corporate effective tax rates (ETR) avoidance. Firm leverage (LEV) and capital intensity (CAPINT) on the other hand has an insignificant inverse influence on effective tax rates (ETR). Hence, this study suggested that firm size (FSIZE), return on assets (ROA), and inventory intensity (INVINT) is the major variable that positively influences the corporate effective tax rates (ETR) the listed large firms in Nigeria.

Highlights

Tax is a compulsory payment of money to the Government by an Individuals or Organizations as the Government covers its expenses on various public functions, and its interference in political, economic, and social life without direct return of benefit to be derived by the taxpayer
We investigated the influence of some corporate tax attributes in some selected large public listed firms in Nigeria with the avoidance of corporate effective tax rates (ETR)
The results of the analysis show that the preferred model is the random effect regression model based on the Durbin-WuHausman (DWH) test result of which were insignificant at the 5% level of significance

Summary

Introduction

Tax is a compulsory payment of money to the Government by an Individuals or Organizations as the Government covers its expenses on various public functions, and its interference in political, economic, and social life without direct return of benefit to be derived by the taxpayer. The principle of taxation should be to impose the least sacrifice on the people as a whole, even if it means imposing more sacrifice on some people and less on others It is not a price paid by the taxpayer for any definite service by the Government. Taxes policy has been an important instrument for augmenting revenue, where it is the major source of domestic revenue It is an important instrument for attaining a proper pattern of resource allocation, distribution of income and wealth, reduction of poverty among people, and economic stability, in order that the benefits of economic development are evenly distributed

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