Corporate Taxes and Profitability of Listed Food and Beverages Firms in Nigeria

Abstract

The study examined the effect of corporate taxes on the profitability of some selected listed food and beverage firms in Nigeria from 2013 to 2022 using secondary data which were sourced from the annual report of the selected food and beverages firms listed on the Nigerian Exchange Group. The study employed Generalized Method of Moments (GMM) regression analysis as the estimation technique. Results on the assessment of the effect of independent variables (company income tax (CIT), capital gains tax (CGT) and education tax (ET) on dependent variable (return on equity (ROE) with firm size (FS) as control variables were also reported. The panel data series were first validated using the unit root test and the result showed a mixed order among the variables which resulted in the use of the Panel GMM. The study found that company income tax and capital gains tax have a significant and positive effect on return on equity. However, education tax has a significant but negative effect on ROE. The study concluded that corporate taxes have a significant effect on profitability of listed food and beverages firms in Nigeria. The study recommended that the government should make sure that the money collected from company income tax (CIT) is used to foster economic growth. Also, a decisive mechanism should be adopted in the mode of capital gain tax collection in order to inhibit leakages. Similarly, the study recommended that there should be increased awareness and education of manufacturing enterprises about the need to pay education taxes.