Effect of Taxation on Dividend Policy of Listed Deposit Money Banks in Nigeria

This study investigated the effect of taxation on the dividend policy of listed deposit money banks in Nigeria, with taxation proxied by Company Income Tax, Capital Gains Tax, Education Tax, and National Information Technology Development Tax, while dividend policy was measured using the Dividend Payout Ratio. The study population comprised fourteen (14) listed deposit money banks in Nigeria over the period 2015–2024, from which thirteen (13) banks were selected through purposive sampling techniques. Secondary data were obtained from the Nigerian Exchange Group, as well as the annual reports and accounts of the sampled banks. The data were analyzed using Pearson’s correlation coefficient and multiple regression analysis with the aid of STATA 14 statistical software. The findings revealed that Company Income Tax has a significant negative relationship with the dividend payout ratio of listed deposit money banks in Nigeria. Similarly, Education Tax and Capital Gains Tax were found to exert significant negative effects on the dividend payout ratio. In contrast, National Information Technology Development Tax exhibited a significant positive effect on the dividend payout ratio of the sampled banks. Based on these findings, the study recommends that the government should strengthen transparency in corporate tax administration and eliminate multiple taxation practices in order to enhance investor confidence and promote tax compliance among firms.

Taxation, Dividend Policy, Dividend-Pay-Out Ratio

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