IMPACT OF WITHHOLDING TAX AND EDUCATION TAX ON FINANCIAL PERFORMANCE OF LISTED MANUFACTURING COMPANIES IN NIGERIA

Abstract

This study explores the impact of withholding tax (WHT) and education tax (EDT) on the financial performance of listed manufacturing companies in Nigeria, with a focus on Return on Assets (ROA) as a measure of profitability. Analyzing secondary data from five firms—Guinness Nigeria Plc, Honeywell Flour Mills Plc, Nestlé Nigeria Plc, Flour Mills of Nigeria Plc, and Nigerian Breweries Plc—over the period from 2014 to 2023, the study employs regression analysis to determine the relationship between tax variables and ROA. The regression model yielded an R-squared value of 0.445, indicating that 44.5% of the variance in ROA is explained by the model, though this result is primarily driven by factors other than the tax variables examined. The coefficients for WHT and EDT were found to be statistically insignificant (WHT: β = -0.122, p = 0.548; EDT: β = 0.030, p = 0.491), suggesting that neither tax significantly affects financial performance. These findings imply that withholding and education taxes have minimal direct impact on profitability, indicating a need for further research into other determinants of financial performance and a review of tax policies. The study provides insights that could guide policymakers in refining tax strategies to better support the manufacturing sector