Debts And Tax Payable: Sacrosanct Evidence From Manufacturing Companies

Abstract

Debts are the financial instrument employed by the manufacturing companies to upsurge their financial potency for day to days running of the business which invariably has consequence on taxable income and interest expenditure. Therefore, this study examines the effect of debts on tax payable in manufacturing companies in Nigeria from 2011 to 2023. Data collected through the financial statement of selected manufacturing companies were analyzed with Panel data analysis such as Random effect model, Fixed effect and Hausman test. It was discovered that creditor has negative effect on tax payable in Nigeria manufacturing companies. Also, debenture possessed negative effect on tax payable. Bank loan, bonds and short-term loan negatively and significantly affected tax payable in Nigeria manufacturing company. Conclusively, debts have negative effect on tax payable in Nigeria Manufacturing companies. It is recommended that government should set aside monitoring device to monitor the debts accessibility of manufacturing companies in order to checkmate the excessiveness in their debt collection, so as to enhance tax payable by the manufacturing companies. Keywords: Bank loan; Bonds; Creditors; Debenture; Short term Liabilities; Tax Payable