CORPORATE TAXATION AND PROFITABILITY: A COMPARATIVE STUDY OF AGRIBUSINESSES AND PHARMACEUTICALS COMPANIES IN NIGERIA

Abstract

This study aimed at investigating corporate taxation and profitability of agribusinesses and pharmaceutical companies in Nigeria, and as such we raised the question “what effect has company income tax and education tax on the profitability of agribusinesses and pharmaceutical companies in Nigeria. In addition, we further asked whether the impact of corporate tax is greater on agribusinesses or pharmaceutical companies. This study adopted the longitudinal research design which combines cross-sectional and time series data of selected listed agribusinesses and pharmaceutical companies in Nigeria for eight years (2017-2024). The dependent variable in this study (profitability) was measured as profit before tax while the independent (corporate taxation) was operationalized by companies income tax (CIT) and education tax (ET). The result of the analysis showed that there is a negative and significant relationship between 
company income tax and profit before tax of agribusinesses and pharmaceutical companies in Nigeria while there is also a negative but non-significant relationship between company income tax and the profit before tax of agribusinesses and pharmaceuticals companies in Nigeria. It was recommended that the relevant tax authorities should provide more incentive reforms to prevent significant adverse effect on the financial performance of agribusinesses in Nigeria. More so, the government should reduce corporate tax rate of pharmaceutical companies so as to increase the demand for labour which in turn raises wages and increase consumption therefore, a reduction in the corporation tax rate will reduce the incentives to shift profit out.