EFFECT OF AUDIT TENURE AND INVESTMENT IN PROPERTY, PLANT, AND EQUIPMENT ON TAX AVOIDANCE OF LISTED FINANCIAL FIRMS IN NIGERIA
Sani AbdulRahman Bala, Musa, Usman Mamuda and Jamilu Jibril
Volume 3 Issue 2
Abstract
The study investigates the influence of audit tenure and investment in property, plant, and equipment (PPE) on tax avoidance in Nigerian financial companies. The study examined a sample of 40 financial firms listed on the Exchange Group between 2015 and 2021. By utilizing a robust regression model, the findings of this study indicate that while audit tenure does not significantly impact tax avoidance, there is a significant association between investment in PPE and a decrease in tax avoidance among Nigerian financial firms. Specifically, the results suggest that for every 1% increase in PPE investment, tax avoidance decreases by approximately - 0.05%. Based on these conclusions, it is recommended that the Finance Act 2023, which was signed into law on 28 May 2023 by the previous Administration of Muhammadu Buhari and eliminates Section 32 of the CITA (provision for reconstruction investment allowance on qualifying plants and equipment), be reconsidered by the current national assembly. These findings hold important implications for policymakers and financial firms in developing nations, as they affirm the importance of maintaining appropriate audit tenure and making sufficient investments in PPE for effective tax administration. Further, the study identified the need to capture unregistered taxpayers, Tax evaders and Delinquent taxpayers in the tax net as additional strategies that can enhance tax compliance. Keywords: Audit Tenure, Property, Plant, and Equipment, Corporate Tax Avoidance, Financial service firms
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