Impact of Tax Exemption on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria

This paper examines the impact of tax exemption on the financial performance of consumer goods manufacturing firms in Nigeria using a panel dataset spanning 2015 to 2024. The population of the study consists of listed consumer goods firms in the Nigerian Exchange Group’s website. The study has a sample of seven firms (7). This study employed Panel Autoregressive Distributive Lag (PARDL) model otherwise known as the heterogenous dynamic panel data modeling for the estimations of the parameters. The variables used in the study includes financial performance as the dependent variable measured by return on asset (ROA), while the independent variable is tax exempt and firm’s size as moderating variable. The results reveal that there is a positive and statistically significant relationship amid tax exemption and financial performance of consumer goods manufacturing firms in Nigeria over the period of the study in both long run and short run respectively, suggesting that tax exemption enhances the performance of manufacturing firm in Nigeria. The study recommends that Federal Government through NRS should priotize tax exemption as a strategic instrument for stimulating profitability and shareholder value. This can be done by making a condition that tax exemption proceeds be re- invested back into business and period of exemption should be reduced to a reasonable period to avoid tax erosion.