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Value Added Tax (VAT) And Financial Performance of Consumer Goods Firms: A Case of Cadbury Nigeria Plc

Obentey, Austin Amawei, Gbalam Peter Eze PhD

Abstract

This study examines the effect of Value Added Tax (VAT) on the financial performance of consumer goods firms, with a specific focus on Cadbury Nigeria Plc, covering the period from 2012 to 2023. VAT, introduced in Nigeria in 1993, remains one of the most significant sources of government revenue, yet its implications for firm profitability continue to attract scholarly debate. The study adopts an ex-post facto research design and relies on secondary data extracted from Cadbury Nigeria Plc’s audited financial statements. Three key dimensions of VAT, total sales revenue, VAT rate, and VAT paid by consumers, were analyzed against earnings per share (EPS) as the primary measure of financial performance. Using econometric analysis, including descriptive statistics, correlation, regression, and diagnostic tests, the findings reveal that while total sales revenue exerted a positive but statistically insignificant influence on EPS, both VAT rate and VAT paid by consumers had negative and insignificant effects on EPS. The results further show that about 58.12% of variations in EPS could be explained by VAT-related variables, although the overall joint effect was statistically insignificant. These findings suggest that other external and internal factors beyond VAT play a more substantial role in determining shareholder returns in Cadbury Nigeria Plc. The study concludes that although VAT contributes to government revenue, its impact on firm-level financial performance is minimal. It recommends that policymakers adopt balanced tax reforms to support revenue mobilization without stifling firm profitability, while firms should enhance operational efficiency and strategic tax planning.

Keywords

Value Added TaxFinancial PerformanceConsumer Goods FirmsCadbury

References

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