Evaluating the Effect of Tunnelling on Tax Aggressiveness Among Listed Non-financial Multinational Corporations (MNCs) In Nigeria

Abstract

This research aimed to examine the effect of tunnelling on tax aggressiveness (proxy by Effective Tax Rate (ETR) and Cash Effective tax rate (CAETR) among listed multinational corporations (MNCs) in Nigeria, alongside exploring how managerial ownership moderates this relationship. A quantitative approach was adopted, employing an ex post facto and longitudinal design to analyse the interplay between variables. Secondary data was sourced from the financial statements of multinational manufacturing firms listed on the Nigerian Exchange Group over a decade, from 2012 to 2022. The population included 14 non-financial multinational corporations listed in Nigeria by the end of the 2022 financial year. Based on availability of data, 10 firms were purposively selected as sample size. Panel regression techniques, specifically the random effects model, were applied to evaluate the relationships between the variables. The findings from the panel regression analysis indicated that tax tunnelling positively and significantly influenced tax aggressiveness when assessed by Effective Tax Rate (ETR) (β=2.568, p<0.05), while it had a negative and significant effect when evaluated through Cash Effective Tax Rate CAETR (β= -60.244, p<0.05). This study builds on existing research concerning tax aggressiveness by focusing on the influence of tunnelling among multinational corporations in Nigeria and investigating the moderating effect of managerial ownership on the relationship between tax tunnelling and tax aggressiveness within this context.