Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Taxation and Performance of Manufacturing Companies in Nigeria: Evidence from Flour Mills Plc

Onwuka, Onwuka Okwara, PhD, ACTI, Akoma Jonathan

Abstract

The study examined the impact of taxation on the performance of manufacturing company in Nigeria from 2005-2021. The study sought to determine if taxation has any impact on the return on asset (ROA) and earnings per share (EPS) using flour mills plc as a case study. The Ex-post research design was adopted and time series data were collected for the study. The ordinary least square regression analysis was used in the analysis. The findings revealed that there is no significant relationship between taxation and the performance of manufacturing company in Nigeria. From the result of the analysis, independent variable of tax showed a weak and negative relationship with ROA and weak and positive relationship with EPS. The study recommends that there should be improvement in the effectiveness of tax administration by ensuring proper assessment. Also, all Relevant Tax Authorities (ROA) should endeavour to have good relationship with the Professional Associations like Chartered Institute of Taxation of Nigeria (CITN) and Institute of Chartered Accountants of Nigeria (ICAN) involved in tax matters so as to increase their support in reducing tax malpractices perpetrated by tax payers with the connivance and often active support of external auditors and tax consultants. Also, the entire tax system as well as the taxes that affect the performance of manufacturing sectors should urgently be overhauled for more effectiveness to achieve the desired results.

Keywords

TaxROAEPSManufacturingPerformance

References

Adebiyi, M. A. and Babatope, O. B. (2004). Institution Framework, Interest Rate Policy and the Financing of the Nigeria Manufacturing Association of Nigeria Perspective. Abuja: Central Bank of Nigeria Publication. Adewuyi, A. O. (2006). Trade Policy Reform and Technical Efficiency in Nigeria’s Manufacturing Sector. A Paper Prepared for The African Econometrics Society (AES). Conference June 2006. Adeyemo, K. and Anowai, N. C. (2016). Tax Incentive and the Growth of Manufacturing Firms in Nigeria. The Social Science 11: Medwell Journals. 1338-1342. Akakpo, V. K. A. (2009). Principles, Concepts and Practice of Taxation. (3rd ed) Accra: Blackmask Ltd. Albertazzi, U. and Gambacorta, L. (2006). Bank profitability and taxation, Banca d’ltalia. Economic Research Development, 1 (2), 345-357 Aniahu, M. C and Amahalu, N. N. (2017). Effect of taxation on dividend policy of quoted deposit money banks in Nigeria (2006-2015). EPH- International Journal of Business & Management Science, 2 (3), 1-30. Arikpo, F.O., Ogar, A., and Cornelius, O.M. (2017). The Impact of Fiscal Policy on the Performance of Manufacturing Sector in Nigeria. Euro-Asian Journal of Economic and Finance, 5(1), 11-22. Beigi, M., Rafat, B. and Panah, H. (2013). The analysis of the effect of tax on profitability indices in listed companies of Tehran stock Exchange. European Online Journal of National and Social Sciences, 2 (3), 86-98. Chen, Y., Ge, R., Louis, H. and Zolotoy. L. (2019). Stock liquidity and corporate tax avoidance. Review of Accounting Studies, 24 (1), 309-340. Chigubu, E., Eze, L. and Ebimobowei, A. (2011). An empirical study in the causality between economic growth and taxation in Nigeria. Current Research journal of Economic Theory, 4(2), 29-38. Eze, R. O. and Ogiji, O. F. (2013). Impact of Fiscal Policy on the Manufacturing Sector Output in Nigeria: An Error Correction Analysis. International Journal of Business and Management Reviews (IJBMR), 1(3), 35-55. Feldstein, M. (2008). Effects of Taxes on Economic Behaviour. NEGR; 1(1); 261-277 Gatsi, J., Gadozo, S. and Kportorgbij, H. (2013). The Effect of Corporate Income Tax on Financial Performance of Listed Manufacturing Firms in Ghana. Research Journal of Financial and Accounting, 14(4), 118-124. Graham, J. (2003). Taxes and Corporate Finance: A review. The Review of Financial Studies, 16 (4), 1075-1129. Grant, R. (1991). The Resources-based Theory of Competitive Advantage: Implications for Strategy Formation. California Management Review, 33,114-135. Hayes, Adam (2021). Laffer Curve Theory on Economy. Evidence from Investopedia. Https://Www.Investopedia.Com/Terms/L/Laffercurve.Asp Junaidu, M. and Hawau, S. (2018). Corporate tax financial performance of listed Nigeria consumer goods. Journal of Accounting and Financial Management, 4(4), 30-43. Mohammad, Y. and Ahmed, H. (2019). Effect of corporate income tax rate on investment decisions of listed deposit money banks in Nigeria. Proceedings at the 9th Account and Financial Research Associate (AFRA) Conference Keffi, 2019. Ogbuagu, A. and Ewubare, D. B. (2017). Financial Deepen Implication Macroeconomic volatility and Economic Growth in Nigeria; a multivariate approach, International journal of the Economics, Finance and management Science. Vol 5, No.1, 2017, Pp. 66-80 Onwuka, O. O. (2007). Taxation in Nigeria and Petroleum Profit Tax: Principles and Practice. (2nd Ed) Pp. 1-5, Enugu; E.P.P. Publishers. Otwani, M., Simiyu, G. and Makokha, E. (2017). Effect of corporate income tax on the performance of companies listed on the Nairobi securities exchange in Kenya. International Journal of Social Science and Information Technology, 3 (8), 2467-2477. Pearce, J. and Robinson, R. (2011). Strategic Management: Formation Implementation and Control. (12th Ed.). New York: McGraw Hiu/Irwin Rasheed, O. A. (2010). Productivity in Nigeria Manufacturing Sub-sector. European journal of Economics, Finance and Administrative Sciences, 6(8), 1450-2275 Saez, Emmanuel (2001). Using Elasticity’s to Drive Optimal Income Tax Rates, Review of Economics; 6(1): 37-454 Teraoui, H. & Kaddur, A. (2012). Taxation and corporate finance: What effects a fiscal measure on financial and economics return? The case of Tunisian firms after the finance law of 2007. Journal of Business Studies Quarterly, 3 (3), 87-94. Tim, Walshaw (2020). A Textbook Titled: The Laffer Curve. (3rd Ed) 50-60. Vrzina, s. & Dimitrijevic, M. (2020). Determinants of Profitability of the Agricultural Sector of Vojvodina: The Role of Corporate Income Tax. European Journal of Applied Economics, 17 (1), 1-19

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT

Cashflow Management and the Performance of Commercial Banks in Nigeria

Author: Jeffrey Ayas Iyakonbogha, Clement E. Ozele

The Nigerian Code of Corporate Governance and Financial Performance of Deposit Money Banks in Nigeria

Author: i, Eneaniofu Daniel Mmaduakonam, ii, Azolike Nkiru Nkechi, iii, Emeter Patrick Okechukwu, iv, Okwor Emmanuel Ejimnkonye