Tax Incentives and Financial Performance of Consumer Goods Companies in Nigeria
Abstract
This study examines the relationship between tax incentives and the financial performance of consumer goods companies in Nigeria. Specifically, it investigates how capital allowance and tax relief for research and development (R&D) relate to net profit margin and return on equity . The study adopts an ex post facto research design, utilizing secondary data extracted from the audited financial statements and annual reports of all 20 consumer goods companies listed on the Nigerian Exchange Group . A census sampling technique was employed to ensure comprehensive coverage of the sector. Data were analyzed using descriptive statistics and Pearson correlation analysis to determine the strength and significance of the relationships between the variables. The findings reveal that capital allowance has a positive and significant relationship with both NPM and ROE, indicating that firms that effectively utilize capital allowances achieve higher profitability and enhanced shareholder returns. Similarly, tax relief for R&D shows a positive and significant relationship with NPM and ROE, suggesting that R&D incentives stimulate innovation, improve operational efficiency, and strengthen overall financial performance. The study concludes that tax incentives play a crucial role in enhancing firm profitability and value creation within the consumer goods sector. It recommends that companies strategically leverage capital allowances and R&D tax reliefs to improve profitability, drive innovation, and sustain long-term growth.
Keywords
Tax IncentivesCapital AllowanceResearch and Development Tax Relief
References
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