CORPORATE TAX PLANNING AND TAX AVOIDANCE OF COMMERCIAL BANKS IN NIGERIA

Abstract

The main objective of the study is to investigate the relationship between corporate tax planning and tax avoidance of commercial banks in Nigeria. The specific objective was to determine the effect of incentive tax rate on loophole exploitation of commercial banks in Nigeria for the period 2020-2024; determine how capital tax planning influences loophole exploitation of commercial banks for the period 2020-2024. Ex-post facto research design was employed for the study. The population of the study was twenty-six commercial banks and a sample size of five banks was used for the study. The study employed secondary sources of data collection from the published financial statement of sample banks. The data collected were analyzed using univariate, bivariate and multivariate analysis. The results from the multiple regression analysis revealed that incentive tax rates have a positive and significant impact (b-0.257, P<0.01) on loophole exploitation. Capital tax planning also have a positive and significant effect (B-0.257, P<0.05) on loophole exploitation and tax savings strategies significantly contribute to loophole exploitation (B=0.316, P<0.05). On the basis of this findings, the study concludes that tax planning is positively correlated with tax avoidance, particularly in instructions with sophisticated financial strategies and access to skilled tax advisors. Factors such as capital structure, tax incentive regulatory consistency, significantly determines tax avoidance. In line with the findings, the study recommends that government should strengthen tax governance and documentation, to maintain a dedicated tax team and ensure proper coordination gross finance, legal and compliance of tax payment. Deductible, expense and capital allowances such as staff costs, training, IT and branch operations with proper documentation to avoid non tax payment.