Deferred Tax Implication on the Performance of Firms in Nigeria: Evidence from Listed Consumer Firms in Nigeria

The study focused on deferred tax implications on the performance of firms in Nigeria: evidence from listed consumer firms in Nigeria. Deferred tax is an outcome of the matching principle, aiming at recognising the tax consequences of items reported with the financial statement in the same accounting period as the item itself. A source for the future application is created in the form of a deferred tax liability. The creation of this source, credited the deferred tax expenditure in the current period, causes the limitation of the distribution of the parts of profit. To achieve the objective of this study, the ex-post facto research design was adopted. The researcher adopted secondary data through the use of annual reports and accounts of the selected firms. The data collected were analyzed using simple regression analysis. The findings revealed that deferred tax has a positive but insignificant impact on return on assets and return on equity of firms in Nigeria. The findings also revealed that deferred tax has a positive and significant impact on earnings-per share of firms in Nigeria. Based on the findings, the study recommends that Firms in Nigeria should make tax planning as part of the firm’s strategic financial planning, employed the services of experts in tax practices due to the complexity and dynamic nature of Nigerian tax laws. This would help in enhancing their performance. Also, firms should effectively utilize all-inclusive tax planning strategies available in order to further influence financial performance positively.