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Over the s there has being an increased interest and focus amongst policy makers and regulators on the banking sector, this is because of the pivotal the banking sector plays as catalyst of development and growth in a nation’s economy.

According to Albertazzi and Gambacorta (2014) the banking sector plays a crucial in the process resource allocation, circulation and mobility of capital, and any form of distortion in its functioning is likely to result in an economy-wide effects.

Furthermore Komolov (2015) noted that banks being accumulators of capital flows in the economy play a central in public budget revenue formation. Corporate organizations all over the world pay taxes known as company income tax.

In other words, company income tax (corporation tax) is the tax that is charged on the chargeable profits of corporate organizations. In Nigeria for example, company income tax is being administered at the eral level by a body known as eral Board of Internal Revenue (FBIR), and is equally legislated by the Companies Income Tax ACT (CITA).

Corporate tax is levied at a flat rate for each category of entities but may be subjected to a number of rebates, allowances or exemptions. The rate of tax differs in different countries around the world e.g. in Nigeria it is 30% in Organization of Economic

Corporation and Development (OECD) countries it is 25%, in China 25% and USA 35 %. As companies play a crucial in any nation’s economic growth, so also does not corporate tax. In Norway Corporate income tax contributes about 12.4% to its entire GDP.

It is also important to note that with the recent fall in oil prices, there have been necessitated calls in Nigeria for a more effective and efficient tax system to mitigate the effects. Thus, emphasizing the continuous importance and relevance of tax to socio-economic growth and development.

However the growing body of research relating to banking sector has focused majorly on bank regulations and supervision, the corporate governance structure within the bank and the effect of indicators on the banking sector, very little attention has being given to relationship that subsists between the banking sector and taxation (which is cornerstone of government fiscal policy).

Caminal (2013), argues that although the intersection between financial intermediation and taxation, which is the taxation of financial intermediation (banks) may appear at first sight to be a narrow topic only attracting the attention of specialists,

such impression are in actuality misguided as banks play a crucial in the allocation of resources and the growth process, and cannot be treated as just another industry. He also noted that the fiscal treatment of the financial sector is very complex in most countries, with a combination of regular and special taxes, implicit subsidies and exemptions.

Similarly, Gallemore, Mayberry, and Wilde (2017), opines hat understanding whether corporate taxation is associated with bank choices has important policy implications given of the critical that banks play in spurring economic activity by providing liquidity and capital for businesses and individuals.

More so, after global financial crisis both developed and developing countries strengthened the bank regulation strategies due to sudden failure in global banking system. Bank capital regulation was the main measure and the most reliable safety net for keeping the banks solvent.

However, insolvent fiscal condition sparked the debates over taxing solvent profit-oriented entities – banks (Komolov, 2015). Albertazzi and Gambacorta (2014) elucidated the different channels through which the corporate taxes operate and how they interact with the banking sector.

A first “direct” effect stems from the presence of capital requirements and with the fact that the company income tax is a tax on equity: thus CIT influences banks’ behaviour by making lending more or less costly.

A second “indirect” channel, which has not previously emphasized in the literature, is due to the fact the CIT is not specific to the banking sector: therefore, CIT may indirectly influence banks by moving upward or downward the corporate demand of loans and of fee generating services.

Furthermore, Ogbonnaya and Omodero (2018) noted that the liquidity challenges faced by Nigerian banks in the recent times and the restricted access to bank loans and facilities by firms and individuals could be linked with high corporate tax payment and this has adversely affected the economy at large.

As corporate organizations looks to maximize shareholders value, it will seek to maximize its profitability in the process. Profitability is a determinant of how well off a company is. The level of profit of a company at any point in time has consequences attributed to it.

A high profit making organization will have better motivated staffs, improved product quality and increased shareholders value while a low profit making organization will have vice-versa effect. Thus, high corporate tax rate would lead to low or declining profits which has adverse effects on the company.

Other major performance determinants of corporate organization which would be affected by a disproportionate tax rate are its return on investment (ROI), dividend per share (DPs) Earnings per share (EPs) liquidity and also its market price share (MPPs). A dividend is money a company pays to its shareholder from profits made over a period of time.

Shareholders expects to be paid dividend as and when due. Firm dividend policies will determine the amount of investment it will receive as markets react positively to dividend increases and negatively to deceases. More so, investment decision of corporate organizations is to a large extent being affected by corporate taxes.

Companies expect a high return on their investment. A high corporate tax rate would lead to low profits thus resulting in low investment. Similarly investors will quickly re-balance off their investments and flee to other countries with a better tax system.

Also, the effect of corporate taxes on the performance of certain banking sector indicators, namely customer deposits and bank loans. There is therefore, the need to maintain adequate balance between the goals of maximum resource development and tax benefits to ensure equitable and sustained growth.


Taking a look at the issue of corporation tax, it can be said that there are many problems associated with tax and tax collection including the administrative, compliance, corruption, bad governance, human capacity building challenge among others. Thus, the corporate tax as currently applied is not a tax on pure profits or economic rents.

It is believed, however, that tax reliefs and rebates will influence investment decisions, growth and ultimately the performance of the companies. There is certainly no doubt that tax contributes immensely to socio-economic growth and development.

It is however imperative to take cognizance of its effect on the effectiveness and efficiency of corporate organization operations. Company’s profitability, investment decisions, dividend policy decision and customer loans and deposit in banks are likely to be affected by corporate tax among other reasons.

In addition, there is another challenge of double taxation which could be looked at in two scenarios. One of which is that corporate organizations are not only being charged on the profits they make alone but also dividends being paid to its shareholders.

In a bid to avoid some of these challenges posed by corporate taxes, some corporate organizations indulge in tax evasion and avoidance practices. Review of related literatures has revealed that the study of such topic is still scare especially in this part of the country. It is on this backdrop of ideas and gap in knowledge that this study was necessitated.



The major aim of the study is to examine the effect of taxation on corporate body. Other specific objectives of the study include;

    1. To examine the effect of corporate tax rate on corporate profitability.


    1. To determine the effects of company income tax on dividend decision policy of corporate organizations.


    1. To examine the effect of taxation on corporate body performance.


    1. To examine the impacts of corporate taxes on investment decision of corporate organizations.


    1. To examine the relationship between taxation and corporate body performance.


    1. To recommend policies for the Nigerian government to use and solve the problems of taxation.



    1. How does corporate income tax affect the profitability of corporate organizations?


    1. What are the effects of corporate tax on the dividend decision policies of corporate organizations?


    1. What are the effects of taxation on corporate body performance?


    1. How does corporate tax affect the investment decisions of corporate organizations?


    1. What is the relationship between taxation and corporate body performance?


    1. What are the recommended policies for the Nigerian government to use and solve the problems of taxation?




    1. There is no significant effect of taxation on corporate body performance.


    1. There is a significant effect of taxation on corporate body performance.



    1. There is no significant relationship between taxation and corporate body performance.


    1. There is a significant relationship between taxation and corporate body performance



The need for on the effect of corporate tax on corporate body performance can be established on the following points. Reduction or abolition of corporate tax can enhance the performance of a business organization.

Secondly, it will help to improve the workers performance because not mud earning’s should be paid as tax. Thirdly, it increases the incentive to invest by shareholders since they will be sure of the adopted return on the invested capital.

The management of business organization should in the light of this employ tax planning techniques, which should enable them, avoid tax. This study is aimed to assisting corporate organizations on how to make proper tax and investment decisions.

It will also provide requisite information to corporate organizations on some of the benefits of tax, challenges and ways of which to tackle those challenges. Also, prospective investors willing to invest in shares of a company will be guided on how to make proper tax planning in accordance with their investments.

The government will also derive means of ensuring that achievement of developmental objectives through taxation does not discourage re-investment of profits. The result of the study would certainly serve the purpose of providing companies income tax to corporate investments. It will also provide a basis that will call for further research to investors, accountants, academicians, auditors and students.

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The study is restricted to the effect of taxation on corporate body, a case study of First Bank of Nigeria.



Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant , literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the .


Corporate: An incorporated limited company under the relevant laws of Nigeria

Corporate Taxation: Range of taxes levied upon the corporate body on its business operation. The range includes corporate income tax, capital gains, capital transfer, sales tax, custom and excise duties.

Tax Rate: The rate to be applied to the assessed value to determine the amount of tax.

Tax: Refers to a compulsory payment of money or occasionally of goods and services from private individuals, institutions or groups to the government, it may be levied upon wealth or income or a surcharge on price.

Income Tax: An income is a levy on the financial income of personnel or corporation or other legal entities.

Company: Is a form of organizing a business with a legal personality distinct from the individual taking part in it.

Corporate Tax: Refers to a direct tax levied by various jurisdictions on the profit made by companies or associations which often includes the capital gain of a company.


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