Effects of Petroleum Profit Tax on the profitability of listed oil and gas firms in Nigeria

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Abstract

In recent time, revenue derived from company income tax has been very low probably because of the unwillingness of tax payers to pay tax as and when due probably because of the likely negative impact that tax payment has on profitability. Against this backdrop, this study investigated the relationship between Petroleum profit tax and the profitability of some selected oil and gas companies in Nigeria. For this purpose, secondary data were extracted from the annual reports and accounts of the purposively selected oil company during 1999 to 2014. Regression analysis was used to analyze the data and the result was that there was a negative and significant relationship between PPT and profitability. The findings indicated that there is a significant negative relationship between PPT and profitability (R = 0.792 R2 = 0.627 & F=.000). The study therefore, concluded that PPT is a crucial factor affecting profitability of oil companies. However, the study recommends that Tax payers’ money should be judiciously spent or properly utilized as this will encourage tax payers to continue to pay taxes. Similarly, government agencies in charge of PPT should sometimes consider the tax avoidance of individual companies as the case may be in order to retain the level of profit that will be generated by these companies.

Keywords: Tax, Taxation, Profitability, Regression Analysis, Oil Company

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Effects of Petroleum Profit Tax on the profitability of listed oil and gas firms in Nigeria

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