The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies

Saratu Lassa Jim-Suleiman; Adzor Ibiamke

doi:doi:10.11648/j.ijfbr.20210701.11

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The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies

Saratu Lassa Jim-Suleiman, Adzor Ibiamke

Published in International Journal of Finance and Banking Research (Volume 7, Issue 1)

Received: 8 November 2020 Accepted: 13 January 2021 Published: 10 March 2021

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Abstract

Profitable companies are expected to pay a 30% companies income tax on their profits earned in Nigeria. However, many companies in Nigeria pay far less due to their application of tax avoidance strategies. This paper report how profitable companies in Nigeria are able to successfully employed the loopholes in the Nigerian tax system to significantly lower their effective tax rate over the past five years. The paper examines 68 companies that are consistently profitable in each of the five years between 2014 and 2018, excluding companies that experienced even one unprofitable year during this period. From the analysis, this paper finds that as a group, the 68 companies examined paid an effective companies income tax rate of only 16.45% over the five-year period - far less than the statutory 30% companies’ income tax rate. Based on the evidence, this paper advocate for a strong alternative minimum tax that can do the job it was originally designed to do thereby bring about transparency, equity and fairness in tax payment in Nigeria. This paper adds new knowledge to the understanding of the state of tax avoidance in Nigeria. Finally, identifying firms’ aggressive tax planning strategies will close the tax loopholes and boosting tax revenue in Nigeria.

Published in	International Journal of Finance and Banking Research (Volume 7, Issue 1)
DOI	10.11648/j.ijfbr.20210701.11
Page(s)	1-8
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Cash Tax, Company Income Tax, Effective Tax Rate, Long-Run Tax Avoidance, Tax Planning, Tax Avoidance

References

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APA Style

Saratu Lassa Jim-Suleiman, Adzor Ibiamke. (2021). The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies. International Journal of Finance and Banking Research, 7(1), 1-8. https://doi.org/10.11648/j.ijfbr.20210701.11

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ACS Style

Saratu Lassa Jim-Suleiman; Adzor Ibiamke. The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies. Int. J. Finance Bank. Res. 2021, 7(1), 1-8. doi: 10.11648/j.ijfbr.20210701.11

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AMA Style

Saratu Lassa Jim-Suleiman, Adzor Ibiamke. The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies. Int J Finance Bank Res. 2021;7(1):1-8. doi: 10.11648/j.ijfbr.20210701.11

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@article{10.11648/j.ijfbr.20210701.11,
  author = {Saratu Lassa Jim-Suleiman and Adzor Ibiamke},
  title = {The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {1},
  pages = {1-8},
  doi = {10.11648/j.ijfbr.20210701.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210701.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210701.11},
  abstract = {Profitable companies are expected to pay a 30% companies income tax on their profits earned in Nigeria. However, many companies in Nigeria pay far less due to their application of tax avoidance strategies. This paper report how profitable companies in Nigeria are able to successfully employed the loopholes in the Nigerian tax system to significantly lower their effective tax rate over the past five years. The paper examines 68 companies that are consistently profitable in each of the five years between 2014 and 2018, excluding companies that experienced even one unprofitable year during this period. From the analysis, this paper finds that as a group, the 68 companies examined paid an effective companies income tax rate of only 16.45% over the five-year period - far less than the statutory 30% companies’ income tax rate. Based on the evidence, this paper advocate for a strong alternative minimum tax that can do the job it was originally designed to do thereby bring about transparency, equity and fairness in tax payment in Nigeria. This paper adds new knowledge to the understanding of the state of tax avoidance in Nigeria. Finally, identifying firms’ aggressive tax planning strategies will close the tax loopholes and boosting tax revenue in Nigeria.},
 year = {2021}
}

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TY  - JOUR
T1  - The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies
AU  - Saratu Lassa Jim-Suleiman
AU  - Adzor Ibiamke
Y1  - 2021/03/10
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210701.11
DO  - 10.11648/j.ijfbr.20210701.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 1
EP  - 8
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210701.11
AB  - Profitable companies are expected to pay a 30% companies income tax on their profits earned in Nigeria. However, many companies in Nigeria pay far less due to their application of tax avoidance strategies. This paper report how profitable companies in Nigeria are able to successfully employed the loopholes in the Nigerian tax system to significantly lower their effective tax rate over the past five years. The paper examines 68 companies that are consistently profitable in each of the five years between 2014 and 2018, excluding companies that experienced even one unprofitable year during this period. From the analysis, this paper finds that as a group, the 68 companies examined paid an effective companies income tax rate of only 16.45% over the five-year period - far less than the statutory 30% companies’ income tax rate. Based on the evidence, this paper advocate for a strong alternative minimum tax that can do the job it was originally designed to do thereby bring about transparency, equity and fairness in tax payment in Nigeria. This paper adds new knowledge to the understanding of the state of tax avoidance in Nigeria. Finally, identifying firms’ aggressive tax planning strategies will close the tax loopholes and boosting tax revenue in Nigeria.
VL  - 7
IS  - 1
ER  -

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Author Information

Saratu Lassa Jim-Suleiman

Department of Accounting, University of Jos, Jos, Nigeria
Adzor Ibiamke

Department of Accounting, Nigerian Defence Academy, Kaduna, Nigeria

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Plain Text BibTeX RIS

APA Style

Saratu Lassa Jim-Suleiman, Adzor Ibiamke. (2021). The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies. International Journal of Finance and Banking Research, 7(1), 1-8. https://doi.org/10.11648/j.ijfbr.20210701.11

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ACS Style

Saratu Lassa Jim-Suleiman; Adzor Ibiamke. The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies. Int. J. Finance Bank. Res. 2021, 7(1), 1-8. doi: 10.11648/j.ijfbr.20210701.11

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AMA Style

Saratu Lassa Jim-Suleiman, Adzor Ibiamke. The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies. Int J Finance Bank Res. 2021;7(1):1-8. doi: 10.11648/j.ijfbr.20210701.11

Copy | Download

@article{10.11648/j.ijfbr.20210701.11,
  author = {Saratu Lassa Jim-Suleiman and Adzor Ibiamke},
  title = {The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {1},
  pages = {1-8},
  doi = {10.11648/j.ijfbr.20210701.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210701.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210701.11},
  abstract = {Profitable companies are expected to pay a 30% companies income tax on their profits earned in Nigeria. However, many companies in Nigeria pay far less due to their application of tax avoidance strategies. This paper report how profitable companies in Nigeria are able to successfully employed the loopholes in the Nigerian tax system to significantly lower their effective tax rate over the past five years. The paper examines 68 companies that are consistently profitable in each of the five years between 2014 and 2018, excluding companies that experienced even one unprofitable year during this period. From the analysis, this paper finds that as a group, the 68 companies examined paid an effective companies income tax rate of only 16.45% over the five-year period - far less than the statutory 30% companies’ income tax rate. Based on the evidence, this paper advocate for a strong alternative minimum tax that can do the job it was originally designed to do thereby bring about transparency, equity and fairness in tax payment in Nigeria. This paper adds new knowledge to the understanding of the state of tax avoidance in Nigeria. Finally, identifying firms’ aggressive tax planning strategies will close the tax loopholes and boosting tax revenue in Nigeria.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies
AU  - Saratu Lassa Jim-Suleiman
AU  - Adzor Ibiamke
Y1  - 2021/03/10
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210701.11
DO  - 10.11648/j.ijfbr.20210701.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 1
EP  - 8
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210701.11
AB  - Profitable companies are expected to pay a 30% companies income tax on their profits earned in Nigeria. However, many companies in Nigeria pay far less due to their application of tax avoidance strategies. This paper report how profitable companies in Nigeria are able to successfully employed the loopholes in the Nigerian tax system to significantly lower their effective tax rate over the past five years. The paper examines 68 companies that are consistently profitable in each of the five years between 2014 and 2018, excluding companies that experienced even one unprofitable year during this period. From the analysis, this paper finds that as a group, the 68 companies examined paid an effective companies income tax rate of only 16.45% over the five-year period - far less than the statutory 30% companies’ income tax rate. Based on the evidence, this paper advocate for a strong alternative minimum tax that can do the job it was originally designed to do thereby bring about transparency, equity and fairness in tax payment in Nigeria. This paper adds new knowledge to the understanding of the state of tax avoidance in Nigeria. Finally, identifying firms’ aggressive tax planning strategies will close the tax loopholes and boosting tax revenue in Nigeria.
VL  - 7
IS  - 1
ER  -

Copy | Download