IMPACT OF TAX PLANNING ON PROFITABILITY OF LISTED INDUSTRIAL GOODS COMPANIES IN NIGERIA
Keywords:
Tax Planning, Profitability, Effective Tax Rate (ETR), Industrial Goods Sector, Nigeria, Return on Assets (ROA), Corporate GovernanceAbstract
This study examined the impact of tax planning on profitability of listed industrial goods firms in Nigeria. The study sampled eleven firms from a total population of thirteen (13) industrial goods firms listed on the Nigerian Exchange Group (NGX) and relevant research information was extracted from the annual reports and accounts of the sampled firms for a period of thirteen years from 2012 to 2024. Data was analyzed using descriptive statistics to provide summary for the variables and correlation analysis was carried out using Pearson correlation technique. Dependent variable profitability was proxies by returns on assets while tax planning was proxies by effective tax rate, tax saving and cash effective tax rate. Ordinary Least Square (OLS) and Generalized Least Square (GLS) regression techniques were used to test the study’s hypotheses. The results show that Effective Tax Rate (ETR) has significant positive impact on profitability (return on assets) while Tax Saving (TS) and Cash Effective Tax Rate (CETR) has insignificant impact on profitability of listed industrial goods firms in Nigeria. The study recommends among others that Firms should adopt proactive tax strategies to optimize their effective tax rates and enhance overall profitability. This involves a comprehensive assessment of the company's tax position, including identifying available tax incentives, deductions, and credits that can be leveraged to reduce tax liabilities.
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