Tax Administration and Thin Capitalization of Listed Manufacturing Companies in Nigeria

The paper seeks to evaluate the effect of Tax administration on Thin Capitalization of listed manufacturing companies in Nigeria. The study utilized Autonomy in Operation (AIO), Transparency in Assessment and Income Collection (TAI), Accountability in Revenue Remittance (ARR), Motivation for Effectiveness and Efficiency (MEE) Professional Competence (PFC) as constructs for Tax Administration on Thin Capitalization of Listed manufacturing companies in Nigeria. A survey research design was adopted for the study. The study population comprises 475 staff members of the Federal Inland Revenue Service (FIRS) Offices in Lagos where the listed manufacturing companies file their annual tax returns and 15 major tax consultants who prepare and file these tax returns for the companies. The sample size of 220 staff members in these organizations was calculated using Taro Yamane’s formula and randomly selected. Data were collected through the administration of copies of questionnaires. The reliability of the data was tested using the Cronbach Alpha Coefficient Technique. Descriptive and inferential (multiple regression) statistics were used to analyze the data at 5% level of significance. Descriptive and inferential (multiple regression) statistics were used to analyze the data at a 5% level of significance. The findings revealed that there is a significant effect of Tax administration on Thin Capitalization (TCP) of listed manufacturing companies in Nigeria. This is evidenced by the result of the test, TCP (Adj.R2 = 0.184, F (5, 21) = 9.232, p > 0.05). These findings should be of major interest to policymakers to review the Thin Capitalization rules and provisions in the Nigeria tax laws to evaluate its effectiveness or otherwise in curtailing thin capitalization practices of listed manufacturing companies in Nigeria. This study provides original empirical evidence on the effect of Tax administration on Thin Capitalization on listed manufacturing companies in Nigeria.