Tax Aggressiveness and Financial Performance: Evidence from Quoted Consumer Goods Firms in Nigeria (2012-2023)

Abstract

The conflicting interests between firms seeking to minimize tax liabilities and governments seeking to maximize tax revenue resulting in accusation of excessive taxation by firms on government while government complains of inappropriate tax payment by firms motivated the study. This study, evaluates the effect of corporate tax aggressiveness on the performance of consumer goods companies operating in Nigeria between 2012 and 2023. This is done through an ex-post-facto research design. Data was gathered from the annual reports of 19 organizations. The study utilized descriptive and inferential statistics and, after diagnosis, used Fixed Effect Robust Regression for the analysis. From the results, it becomes clear that CETR shows nonsignificant negative effects on ROA. This implies that both these kinds of tax aggressiveness do not significantly improve organizational performance. On the other hand, NDTS shows a significant positive effect on ROA. For the researchers, managers of consumer goods firms are advised not to solely depend on strategies that will aggressively reduce their tax burden in an effort to increase profits. At the same time, there is need to have better initiatives that help in making operations and capital management as effective as possible since this has been seen to contribute more to financial performance. There is need for consumer goods firms to capitalize on all possible avenues to make investments and take advantage of tax incentives, capital allowances and so forth.