Effect of Tax Exempts and Credits on Operating Cash Flows of Listed Manufacturing Firms in Nigeria: Evidence from the Dangote Group

Abstract

This paper examined the effect tax exempts and tax credits on operating cash flows of listed firms in Nigeria. The population of the study was all the listed manufacturing firms in Nigeria. It employed ex post facto research design and was anchored on the benefit theory of taxation. The study also explored conceptual, theoretical and empirical literatures on the relationship between the predictor and criterion variables. Convenience sampling techniques was adopted to select two companies in the Dangote Group (Dangote Cement Plc and Dangote Sugar Refinery Plc) which were used as samples for the study. Data were collected from annual financial reports of the companies from 2013 to 2022 and analyzed using descriptive statistics, correlation and analyzed using panel regression techniques. The major findings were that; first, tax credit had negative and insignificant effect on operating cash flows. Secondly, tax exempt had negative but significant effect on cash flows. Based on the findings, two recommendation were made as follows; companies should not bother so much about tax credits since it does not have any significant effect on operating cash flows, and companies should consider more tax exempt incomes since they significantly influence operating cash flow.

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