Effect of Corporate Tax Outflows on Operational Performance of Manufacturing Firms in Nigeria

Abstract

Research Objectives: The study examined the effect of Corporate Tax Outflows on operational performance of manufacturing firms in Nigeria. The study specifically examined the effect of company income tax on return on asset of Nigerian manufacturing firms, the extent to which education tax affects return on asset of Nigerian manufacturing firms and also evaluated the effect of value added tax on return on asset of Nigerian Manufacturing firms. 

Methodology: The study adopted ex-post facto research design. The population of the study comprises all the twenty- five (25) manufacturing firms listed on the Nigerian Exchange Group as at 31st December, 2022 while a sample of five (5) firms were chosen from the twenty- five (25) manufacturing firms. Data collected from the sampled firms were analysed using multiple regression analysis. 

Findings: Company income tax has positive and significant effect on profit for the year of Nigerian manufacturing firms with coefficient of 1.382986 and t-Statistic of 0.0000, It was also observed that education tax has positive and significant effect on profit for the year of Nigerian manufacturing firms, with coefficient of 0.833585 and T-Statistic of 0.0011. It was equally observed that value added tax has a positive and significant effect on profit for the year of Nigerian manufacturing firms, with Coefficient of 0.713599 and T-Statistic of 0.0017. 

Recommendations: The study recommended among others that Nigerian manufacturing firms should engage in proactive tax planning and management strategies to optimize the positive impact of various taxes on return on assets. This involves aligning business operations to efficiently utilize assets and meet tax obligations, ultimately enhancing financial performance.