Indirect Taxes and the Financial Performance of Listed Consumer Goods Firms in Nigeria

Abstract

This study investigates the impact of stamp duties (STD) and value added tax (VAT) on return on assets (ROA) and return on equity (ROE) using regression analysis on a dataset spanning the past decade from Nigerian consumer goods firms. The findings reveal that STD and VAT insignificantly influence ROA, suggesting that variations in STD and VAT rates and policies directly affect a firm's profitability from its assets. In contrast, both STD and VAT show significant effects on ROE, indicating that these taxes directly impact the return generated from shareholders' equity. These results underscore the importance of strategic tax planning tailored to different financial metrics to optimize financial performance and inform policymakers on designing tax policies that balance revenue generation with business sustainability. It is recommended that companies should develop and implement robust tax planning strategies to optimize their tax liabilities. This involves staying informed about current and upcoming tax regulations, seeking professional tax advice, and utilizing available tax incentives and reliefs.