Tax Incentives and Firm’s Profitability: Evidence from Manufacturing Companies

Abstract

This research work centered on the establishment of the how tax incentives can improve profit statement of selected manufacturing companies in Nigeria. The major objectives of the research paper is to determine the effect of tax procedures on profitability of firm in selected manufacturing companies and to determine the effect of tax incentives on profitability of firms in selected manufacturing companies, primary source of data which was questionnaire was adopted for this research work and based the peculiarity of the research paper title and population consisted selected manufacturing companies in Nigeria. The hypotheses were tested and analysed through the aid of Statistical Tools for Social Science (SPSS version 23). The results of the analysis established that tax incentives has no positive and significant impact on the profitability of fifirms of listed manufacturing companies in Nigeria. However, the researcher was of the opinion that with the tax-exempt income and loss relief, there is a significant relationship between tax incentive and profitability of firms of listed manufacturing companies in Nigeria. The study concludes that the government of Nigeria should encourage tax incentives in some industries which increase their returns on asset. In addition, manufacturing companies that encounter losses may apply those losses to previous tax payments in order to boost their returns on assets. This is based on the condition that they do not demand existing refunds in excess of cumulative tax payments in those years. In this study, the researcher recommends that manufacturing companies in Nigeria be made more aware of the importance of tax incentives. They should also be required to take advantage of such incentives to increase the country’s manufacturing industries. Finally, policy makers should help to create a more enabling climate by providing good roads and electricity, which have become the primary causes of manufacturing firms profit losses. Keywords: Manufacturing Firms: Tax Incentives: Organizational Profitability: Nigeria