IMPACT OF COMPANY INCOME TAX ON CORPORATE PERFORMANCE

ABSTRACT

The study examined the impact of company income tax on corporate performance. The study employed ex post facto research design using data from 12 listed firms on Nigerian Stock Exchange, of which data for the study was collected from the annual reports and accounts of the companies and regression analysis was used as a technique for data analysis using SPSS 2020.

The data span across 10 years ranging from 2011-2020. Findings from the study revealed that Company income tax (CIT) has a positive and significant effect on profit after tax (PAT), there is also a positive and significant effect on returns on equity (ROE) while change in shareholders funds (CSHF) has a negative but yet significant effect on ROE and company income tax (CIT) has a positive and significant effect on shareholders earnings. All of which were tested at a 0.05 level of significance.

Hence, based on the results obtained from this study it is recommended that that the fiscal policy adopted in the country should consider the circumstances surrounding the activities of companies located in Nigeria and the special role they play in the pursuit of economic growth of the nation. Tax incentives and positive tax reforms that could reduce the burden of tax companies in Nigeria should be incorporated in the fiscal policy to encourage their business activities and going concern. New regulations to curtail excess corporate tax rather than eliminate corporate tax is necessary to enable companies have enough liquidity to meet its short term liabilities as they fall due should be adopted. A reduction in the corporation tax rate will therefore reduce the incentives to shift profits out and will also increase the level of investment in the country.