Effect of tax on the profitability of listed consumer goods firms in Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i2.336.74-91Keywords:
Company income tax, Consumer goods firms, Effective tax rate, Nigeria, Profitability, Taxation, Tax incentives, Withholding taxAbstract
Purpose: This study examined the effect of taxation on the profitability of listed consumer goods firms in Nigeria over the period 2015–2024.
Methodology: An ex-post facto research design was adopted. A purposive sampling technique was used to select 13 firms out of the 21 listed consumer goods firms, resulting in a balanced panel dataset of 130 firm-year observations. The study relied solely on secondary data obtained from published annual reports and audited financial statements of firms listed on the Nigerian Exchange Group. Profitability was measured using return on assets (ROA), while taxation was proxied by company income tax (CIT), effective tax rate (ETR), withholding tax (WHT), and tax incentives (TINC), with firm size as a control variable. Data were analyzed using descriptive statistics, correlation, and panel regression (Fixed and Random Effects), with the Hausman test guiding model selection.
Results and Conclusion: Findings showed moderate profitability and no multicollinearity. The Fixed Effects Model was preferred. CIT, WHT, tax incentives, and firm size had positive significant effects on ROA, while ETR had a negative significant effect. The study concluded that taxation significantly influenced profitability.
Implication of Findings: Sustained tax incentive policies are essential for enhancing profitability and growth.
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