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Timothy Aondona Aondover
Ignatius Ajuru University of Education, Rumuolumenu, Port Harcourt

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The Impact of Company Income Tax and Petroleum Profit Tax on the Profitability of Listed Oil and Gas Firms in Nigeria Timothy Aondona Aondover
Economit Journal: Scientific Journal of Accountancy, Management and Finance Vol 5 No 1 (2025): Economit Journal: Scientific Journal of Accountancy, Management and Finance: (Feb
Publisher : Britain International for Academic Research (BIAR-Publisher)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.33258/economit.v5i1.1298

Abstract

This conceptual paper examined the impact of company income tax (CIT) and petroleum profit tax (PPT) on the profitability of listed oil and gas firms in Nigeria. These taxes are integral to Nigeria’s tax structure, especially for oil and gas companies that contribute significantly to the nation’s revenue. The paper provides a theoretical framework to analyze the relationships between taxation and profitability, proposing how these taxes might affect the performance of these firms. Drawing from existing literature, the study aims to explore key mechanisms through which CIT and PPT influence profitability, such as tax burden, operational efficiency, investment decisions, and capital structure. The research was conducted against the backdrop of the increasing importance of the oil and gas industry in the Nigerian economy and the need to understand how government taxation policies affect the profitability of companies in the sector. The paper argues that company income tax and petroleum profit tax have a significant negative impact on the profitability of listed oil and gas firms in Nigeria. This suggests that higher tax rates imposed by the government can hinder the profitability of companies in the industry. Therefore, it is recommended that the government review its tax policies for the oil and gas industry in Nigeria, taking into consideration the impact on the profitability of listed firms. This will not only lead to a more conducive business environment for these companies but also ensure sustainable economic growth for the country.
Hydrocarbon Tax and Profitability of Listed Oil and Gas Firms in Nigeria Timothy Aondona Aondover
Economit Journal: Scientific Journal of Accountancy, Management and Finance Vol 5 No 3 (2025): Economit Journal: Scientific Journal of Accountancy, Management and Finance: (Aug
Publisher : Britain International for Academic Research (BIAR-Publisher)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.33258/economit.v5i3.1373

Abstract

For more than five decades, Nigeria’s fiscal framework and macroeconomic stability have been shaped by the oil and gas industry, with petroleum revenues providing nearly 80% of government income and 90% of foreign exchange earnings. Central to this fiscal system is taxation, particularly the Petroleum Profits Tax (PPT), which has historically imposed one of the highest corporate tax burdens globally, reaching up to 85% of chargeable profits. While such taxes are indispensable for public revenue mobilization, they also raise concerns about profitability, investment incentives, and long-term sustainability of oil and gas firms. This study investigates the relationship between petroleum taxation and the profitability of Nigerian listed oil and gas companies, with a focus on the transition from the long-standing PPT regime to the dual Companies Income Tax (CIT) and Hydrocarbon Tax (HT) introduced by the Petroleum Industry Act (PIA) of 2021. Using secondary data and descriptive analysis, the study evaluates how tax policy, compliance requirements, and fiscal reforms influence firm-level financial performance. The findings highlight the dual role of taxation as both a revenue driver for government and a profitability constraint for firms, showing that high effective tax rates may discourage investment, compress margins, and intensify compliance costs. However, the restructured tax system under the PIA has potential to foster a more transparent and investor-friendly fiscal environment. By bridging the gap between fiscal policy and firm performance, this research contributes to ongoing debates on balancing government revenue needs with corporate sustainability in Nigeria’s oil and gas sector.
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