The study examines the effect of company income tax on dividend policy of firms in Nigeria. Data
for the study were collected from the annual reports of the nine selected firms listed in the Nigerian
Stock Exchange Data for 2011 and 2015 were analyzed using the Pearson correlation and Ordinary
least squares (OLS) regression analysis. The analyses of the results revealed that profitability is a
core determinant of the dividend policy as there is significant relationship between dividend and
profitability. Also taxes have negative and non- significant effect on the dividend policy of the firms.
It was recommended that since high taxes scared investors and businessmen away, government
should make tax policies that would attract and keep them on track. The paper concludes that there
are other factors that determine the dividends of Nigerian firms other than profitability and taxes.
