Firm specific determinants of corporate effective tax rate of listed firms in Nigeria

Abstract

This study examines the Corporate Effective Tax Rates (ETRs) of non-financial firms listed in Nigerian Stock Exchange. The study also measures the neutrality of taxation within the Nigerian economic sectors and establishes the relationships between ETRs and firm specific characteristics of size, leverage, profitability, capital intensity, inventory intensity, labour intensity and auditor type. Data were extracted from the financial statements of sampled firms in respect of the variables and subjected to analyses in ordinary least square (OLS), random effect and fixed effect models. The results show that ETRs were lower than the Statutory Tax Rate during the period of the study and that there are differences in ETR from one sector of the economy to the other. The study further reveals that larger and more profitable firms are faced with high tax burden while firms with high leverage, capital intensity, and tax expert (auditor type) are faced with lower ETR. There is no significant relationship between ETR and labour intensity.