Volume 8, Issue 3, May 2020, Page: 148-157
Tax Planning Strategies and Profitability of Quoted Manufacturing Companies in Nigeria
Ishola Rufus Akintoye, Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Folajimi Festus Adegbie, Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Chimeruo Victory Onyeka-Iheme, Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Received: May 6, 2020;       Accepted: May 25, 2020;       Published: Jun. 17, 2020
DOI: 10.11648/j.jfa.20200803.16      View  48      Downloads  41
Abstract
Profitability has been the aim of every commercial enterprise but are often not actualized due to high costs and high Effective Tax Rates (ETR). In order to manage the effects of taxes on the profitability of firms, strategies are employed to plan the taxes. This research work focused on effect of Tax Planning Strategies on Profitability of manufacturing firms in Nigeria. Ex-post facto research design was adopted for the study. The main objective of the study was to examine the effect of Tax Planning Strategies on Profitability of Quoted Manufacturing Companies in Nigeria. The population of the Study comprised of 52 manufacturing companies quoted on the Nigeria Stock Exchange as at 17th December, 2018 with 46 as the sample size calculated using Taro Yamani’s formula. Data were collected from the audited annual reports of the sampled companies for a period of 10 years (2008 – 2017). The validity and reliability were based on the statutory audit of the financial statements. Descriptive and inferential statistics were used to analyze the data. The result revealed that there is no significant effect of TP on Return On Assets (ROA) of Quoted Manufacturing Companies in Nigeria. This is evidenced by the results of the test, Adj.R2 = -0.000527 and F-Statistics = 0.919439 and P-value of 0.431292. The Study concluded that tax planning strategies have both negative and positive effects on profitability of Quoted Manufacturing Companies in Nigeria. The study recommended that Tax Managers and Finance Officers should reduce thin capitalization and Capital Intensity to balance the source of income of manufacturing firms, while Research and Development costs should be properly managed to increase their contributions to profitability. Professional Tax Practioners should also be consulted for maximum benefit from tax planning.
Keywords
Capital Intensity, Effective Tax Rate, Profitability, Tax Planning Strategies, Tax Practioners, Thin Capitalization, Research and Development Costs
To cite this article
Ishola Rufus Akintoye, Folajimi Festus Adegbie, Chimeruo Victory Onyeka-Iheme, Tax Planning Strategies and Profitability of Quoted Manufacturing Companies in Nigeria, Journal of Finance and Accounting. Vol. 8, No. 3, 2020, pp. 148-157. doi: 10.11648/j.jfa.20200803.16
Copyright
Copyright © 2020 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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