Taxes play a significant role in the social and economic development of counties. On the other hand, taxes represent a significant cost to firms; hence they devise legal ways to reduce their taxes through tax planning. In East Africa, the statutory tax rate of firms averages 30%, which is considered a major burden to the firms. As a result, this study aims to longitudinally examine the tax planning practices of listed firms in East Africa countries (EACs). The study used twelve-year annual reports of ninety-one firms from EACs. Both cash effective tax rate (CEFR) and accounting effective tax rate were employed as tax planning measures. Descriptive statistics together with Wilcoxon signed-ranked test were used to analyze the results. The study demonstrates the existence of corporate tax planning by the listed firms in EACs. The average CETR of the firms was 17% as opposed to the statutory tax rate of 30%, demonstrating that the firms actively engage in tax planning activities. The evidence further demonstrated a gradual decrease in the tax planning activities of the firms over the past twelve years. The study further found out that the rates of decline in the firms’ tax planning were statistically insignificant. Despite the decrease in the firms’ tax planning, the tax authorities in EACs should enforce tax laws to eliminate the tax planning problem.
Since tax represents an inflow of revenue to the government and an outflow of revenue to firms, factors that influence the tax planning activities of firms have gained considerable attention among management, shareholders, policymakers and researchers. Following the impact of taxation on an economy and a firm, the study investigated the factors that influence aggressive tax management practices of firms listed in East African economies. Data were collected from 99 firms for an 11-year period, from 2008 to 2018. Both cash effective tax rate and accounting effective rate were used as measures of tax planning. Multiple regression models were used for the estimation. The study results showed that smaller firms are more tax aggressive compared with larger firms, which is consistent with the political cost theory. This finding may alert policymakers and regulatory authorities (for example, revenue authorities) that small firms are most likely to avoid paying taxes compared with larger firms. This might be associated with fewer regulations and enforcements imposed on this category of business. The evidence further demonstrated that profitable firms are less tax aggressive. Consistent with the political power theory, this study has confirmed the view that profitable firms have enough earnings to pay their taxes and thus are less tax aggressive. The study further found that older firms are less involved in tax avoidance. This study has policy implications as it will assist both policymakers and firm management in their decision-making. Shareholders and firm management would benefit by understanding why some firms successfully reduce their tax burden compared to other firms.
Purpose: Remittance is essential to economic wellbeing. Realising this fact, this study examined, within the optimist theoretical framework, whether international remittances significantly impact per capita economic growth in Nigeria. Design/methodology/approach: Employing annual time series data spanning 1980-2020, the study adopted the Pesaran, Shin, and Smith ARDL bounds estimating model to examine the type of relationships between remittances and Nigeria’s per capita growth. Finding: The study reveals a statistically significant positive nexus in the long-run and short-run among the variables. Specifically, it found that higher remittances inflow enhances per capita growth both in long-run and short-run in Nigeria. Furthermore, the study found that remittances are sources of external financing and eventually, it is a means to economic growth and also may help to fill fiscal deficit gap. Research limitations/implications: This study recommends that government should, through sound policy option, encourage remittances influx. This could be realised by creating viable relationship among international communities that largely account for remittance inflow into Nigeria. It further suggests a prudent and optimal management of remittances inflow through the appropriate monetary authority. This may include formulating policy that will ease remittance inflow and remove unnecessary barriers to inflow of remittances. Originality/value: The study contributes to literature by examining whether international remittances within the optimist theoretical framework significantly impact per capita economic growth (PCEG) in Nigeria.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
customersupport@researchsolutions.com
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.