TAX PLANNING AND CORPORATE PROFITABILITY IN NIGERIAN MANUFACTURING SECTOR: AN EMPIRICAL ANALYSIS

Abstract

This study examines the relationship between tax planning and corporate profitability in publicly listed Nigerian manufacturing firms from 2015 to 2024. Specifically, it investigates the effects of Effective Tax Rate (ETR), Book-Tax Differences (BTD), and Tax-to-Asset Ratio (TAS) on Return on Equity (ROE). Using panel data from 32 firms on the Nigerian Exchange Group (NGX), we applied fixed-effects panel regression analysis, supported by descriptive statistics, correlation matrices, and diagnostic tests. Results indicate that higher ETR is negatively associated with ROE (β = -0.38, p < 0.01), while higher BTD (β = 0.65, p < 0.01) and TAS (β = 0.58, p < 0.01) positively influence ROE. These findings suggest that strategic, legally compliant tax planning can enhance profitability for Nigerian manufacturing firms. Policy implications include the need for sector-specific tax incentives and simplified compliance procedures to support firm performance.