TAX PLANNING AND FINANCIAL PERFORMANCE OF LISTED PHARMACEUTICAL FIRMS IN NIGERIA

Abstract

Among the objectives of firms is maximizing financial performance continuously. Tax planning remains an under-exploited tool to increase the financial performance of firms. Thus, this study examined the effect of tax planning on the financial performance of all the seven listed pharmaceutical firms on the Nigeria Exchange Group over the period of 2013 to 2022. The study obtained data from the audited annual financial statements of listed pharmaceutical firms in Nigeria. The results of data analyses revealed that effective tax rate, capital intensity and tax savings have significant influence on the financial performance of pharmaceutical companies in Nigeria, while thin capitalization has no significant influence on the financial performance of pharmaceutical companies in Nigeria. Therefore, the study concluded that tax planning has significant influence on the financial performance of pharmaceutical firms in Nigeria. The study further recommended that the board of Directors of pharmaceutical firms in Nigeria should use effective tax rate, capital intensity and tax savings as tax planning to reduce their tax liabilities optimally to improve their financial performance while minimizing the tax liability.