Corporate Tax Planning and Financial Performance of Listed Manufacturing Companies in Nigeria

Abstract

This study investigates the effect of corporate tax planning on the financial performance of 32 listed manufacturing companies in Nigeria from 2013 to 2022. Descriptive statistics, correlation, and regression analysis were employed. The findings revealed that the effective tax rate has an insignificant negative impact on financial performance. Conversely, book-tax difference and tax-to-total assets showed a strong positive significant effect, indicating that strategic tax planning enhances financial outcomes. The study concludes that while a lower effective tax rate has no significant influence on financial performance, strategic tax planning reflected in book-tax difference and tax-to-total assets can significantly enhance it. It recommends that manufacturing companies in Nigeria should prioritize effective tax planning strategies that favouring an increase in book tax difference, ensuring capitalisation on tax incentives and allowances available. Manufacturing companies in Nigeria should be encouraged to focus on the optimum usage of their asset base to ensure that assets are effectively utilised to generate taxable income, thereby improving their tax-to-total assets