Pension Contributions, Fringe Benefits Packages and Tax Avoidance Strategies: Empirical Evidences from Listed Multinational Corporations in Nigeria

Existing studies on tax avoidance among Nigerian listed multinational corporations have focused mainly on firm characteristics, corporate governance, and ownership structures. However, limited attention has been given to how employee-related deductible expenses, particularly pension contributions and fringe benefit packages, influence effective tax rates. This study investigates how pension contributions and total fringe benefit expenses affect tax avoidance strategies, using panel data comprising 31 multinational corporations listed on the Nigerian Exchange Group, spanning the period from 2010 to 2024. The analysis was conducted using panel regression techniques with a random effects specification, implemented through E-Views statistical too to rigorously examine the relationships. The findings indicate that pension contributions has a positive but statistically insignificant effect on the effective tax rate of listed manufacturing firms in Nigeria. In contrast, fringe benefit packages show a negative and statistically insignificant effect on the effective tax rate. Overall, these results suggest that both pension contributions and fringe benefit packages are primarily used for regulatory compliance and employee retention rather than serving as deliberate instruments for aggressive tax planning. This indicates that corporate social and welfare expenses are strategic human capital investments rather than tax-shield mechanisms, implying that policy-driven changes to employee benefits will directly influence workforce stability rather than corporate tax avoidance behaviors. The study recommends that regulatory bodies like the Nigeria Revenue Services and Pen Com should enhance inter-agency data integration to monitor the transparency of these deductions, while firms should focus on optimizing benefit structures to drive productivity rather than fiscal opportunism in the evolving Nigerian tax environment.

Pension Contributions, Fringe Benefit Package, Tax avoidance, Effective Tax Rate and Firm Age

1. Adams, A., & Balogun, S. (2020). Impact of multinational corporations on fiscal sustainability in emerging markets. Journal of Global Economic Studies, 12(2), 45-58. [Google Scholar] [Crossref]

2. Adams, A., Chen, L., & Smith, J. (2022). The role of multinational corporations in Nigeria's GDP and technological advancement. Journal of African Economic Research, 14(3), 112-129. [Google Scholar] [Crossref]

3. Almustapha, A. A., & Umar, S. I. (2023). Assessment on the impact of corporate governance mechanisms on corporate tax avoidance. Journal of Business and Economic Policy, 1(3), 312-323. [Google Scholar] [Crossref]

4. Awaisu, A., & Rabi’u, S. (2015). Firm characteristics and corporate behavior in Nigerian listed firms. Review of Management Sciences, 7(1), 88-102. [Google Scholar] [Crossref]

5. Badrinas, M., & Vilà, J. (2015). Organizational rigidity and conservative efficiency in mature firms. International Journal of Strategic Management, 19(4), 210-225. [Google Scholar] [Crossref]

6. Cadman, B., & Vincent, L. (2015). The role of pension expense in corporate earnings management and tax strategy. The Accounting Review, 90(6), 2235-2260. [Google Scholar] [Crossref]

7. Cadman, B., & Vincent, L. (2015). The role of pension expense in corporate earnings management and tax strategy. The Accounting Review, 90(6), 2235–2260. [Google Scholar] [Crossref]

8. Cafaro, G. (2021). Expatriate compensation packages and global talent retention in multinational firms. Global Human Resource Management Review, 5(2), 77-94. [Google Scholar] [Crossref]

9. Das, S., Gupta, R., & Kumar, P. (2021). Operational cost structures and financial planning in labor-intensive industries. Journal of Financial Management, 33(1), 54-68. [Google Scholar] [Crossref]

10. Ezejiofor, R. A., & Ezenwafor, E. C. (2020). Influence of CEO duality on effective tax rates of quoted food and beverage companies in Nigeria. International Journal of Management Studies and Social Science Research, 2(5), 213-225. [Google Scholar] [Crossref]

11. Ezejiofor, R. A., & Ezenwafor, E. C. (2020). Influence of CEO duality on effective tax rates of quoted food and beverage companies in Nigeria. International Journal of Management Studies and Social Science Research, 2(5), 213–225. [Google Scholar] [Crossref]

12. Innocent, O., & Gloria, T. (2018). Tax exemptions and non-cash perks: Strategies for payroll tax management. Nigerian Journal of Taxation, 10(2), 15-29. [Google Scholar] [Crossref]

13. Inua, O. I. (2018). Tax base erosion and the harmonized framework for taxing fringe benefits in Nigeria. Journal of Taxation and Economic Development, 17(4), 102-118. [Google Scholar] [Crossref]

14. Inua, O. I. (2018). Tax base erosion and the harmonized framework for taxing fringe benefits in Nigeria. Journal of Taxation and Economic Development, 17(4), 102–118. [Google Scholar] [Crossref]

15. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. [Google Scholar] [Crossref]

16. Magnan, M., & Martin, G. P. (2019). Executive compensation and the deductible expense profile of listed entities. Corporate Governance: An International Review, 27(3), 156-174 [Google Scholar] [Crossref]

17. Mahendru, M., Sharma, D., & Pandey, S. (2022). Pension schemes as instruments of corporate social responsibility. Journal of Social Welfare and Management, 9(1), 31-44. [Google Scholar] [Crossref]

18. Mardjono, E. S. (2024). Gender diversity of executive, internal control, institutional ownership, firm size and tax avoidance: An interactive effects business strategy. Jurnal Akuntansi Universitas Jember, 22(1), 80-95. [Google Scholar] [Crossref]

19. Martin, G. P., Wiseman, R. M., & Gomez-Mejia, L. R. (2020). The ethical dimensions of executive equity incentives and pension funding. Business Ethics Quarterly, 30(2), 215-244. [Google Scholar] [Crossref]

20. Martin, G. P., Wiseman, R. M., & Gomez-Mejia, L. R. (2020). The ethical dimensions of executive equity incentives and pension funding. Business Ethics Quarterly, 30(2), 215–244. [Google Scholar] [Crossref]

21. Nkechinyere, O. R. (2018). Transfer pricing and tax planning strategies of multinational corporations in Nigeria. African Journal of Accounting and Financial Research, 6(2), 45-62. [Google Scholar] [Crossref]

22. Olanisebe, S. O., Abdullahi, S. R., & Dandago, K. I. (2023). Determinants of effective tax rates among listed companies in Nigeria. Journal of Accounting and Taxation, 15(1), 12-25. [Google Scholar] [Crossref]

23. Olayiwola, J. A., & Okoro, E. G. (2021). Trade-off between employee welfare costs and tax revenue in Nigeria. Journal of Public Finance, 8(3), 201-218. [Google Scholar] [Crossref]

24. Olorede, O., Adeyemi, A., & Olowookere, J. (2022). Executive compensation, corporate governance, and financial reporting quality in listed firms in Nigeria. Nigerian Journal of Accounting Research, 18(2), 110-128. [Google Scholar] [Crossref]

25. Omodero, C. B. (2025). Effect of corporate sustainability performance and tax reform on tax avoidance: Evidence from listed multinational companies in Nigeria. International Journal of Evolutionary Sustainability and Renewable Energy Solutions, 3(1), 1-15. [Google Scholar] [Crossref]

26. Onyeukwu, P., Akintoye, I., & Oluyombo, O. (2020). Evaluation of tax incentives and social impact in Nigeria. Journal of Economic Policy and Development, 4(4), 89-104. [Google Scholar] [Crossref]

27. Otusanya, O. J. (2016). Corporate governance and human capital development in multinational corporations. International Journal of Disclosure and Governance, 13(2), 143-162. [Google Scholar] [Crossref]

28. Panda, P., & Nanda, S. (2020). Determinants of variation in effective tax rates: An empirical study. Journal of Corporate Finance, 22(1), 67-82. [Google Scholar] [Crossref]

29. Renaud, S., Morin, L., & Béchard, J. P. (2016). Strategic composition of fringe benefit packages in multinational entities. Journal of International Management, 22(3), 254-270. [Google Scholar] [Crossref]

30. Salaudeen, Y. M., & Abdulwahab, A. S. (2022). Corporate governance and tax compliance behavior of listed firms in Nigeria. Journal of Financial Reporting and Compliance, 11(2), 145-165. [Google Scholar] [Crossref]

31. Sani, A. B., & Umar, S. I. (2023). Corporate governance factors and tax avoidance of listed firms in Nigeria. Lafia Journal of Economics and Management Sciences, 8, 242-264. [Google Scholar] [Crossref]

32. Schwab, C. M., Stomberg, B., & Xia, J. (2022). What determines effective tax rates? The relative influence of tax and other factors. Contemporary Accounting Research, 39(1), 459-497. [Google Scholar] [Crossref]

33. Sirén, C., Hakala, H., Wincent, J., & Grichnik, D. (2017). Structural complexity and risk appetite in evolving entities. Strategic Management Journal, 38(5), 1100-1115. [Google Scholar] [Crossref]

34. Verin, L., & Santioso, A. (2024). Ethical dimensions and public trust in corporate tax practices. Journal of Business Ethics and Society, 6(1), 22-38. [Google Scholar] [Crossref]

35. Vuong, Q., & Nguyen, T. (2022). Cumulative monetary costs of non-salary perks in corporate accounting. Asia-Pacific Journal of Business Administration, 14(3), 301-318. [Google Scholar] [Crossref]

36. Vuong, Q., & Nguyen, T. (2022). Cumulative monetary costs of non-salary perks in corporate accounting. Asia-Pacific Journal of Business Administration, 14(3), 301–318. [Google Scholar] [Crossref]

37. Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory. Prentice-Hall. [Google Scholar] [Crossref]

38. Yahaya, K. A., & Yusuf, I. O. (2020). Fringe benefit expenses and effective tax rates in Nigerian listed companies. Journal of Management and Sustainability, 10(2), 134-148. [Google Scholar] [Crossref]

39. Yeye, O., & Egbunike, P. A. (2021). Discretionary accruals and corporate tax avoidance among multinational corporations in Nigeria. Journal of International Accounting, Auditing and Taxation, 43, 100-115. [Google Scholar] [Crossref]

40. Yusuf, R., Sani, H., Musa, L., & Ahmed, H. G. (2024). Effect of compensation on employee performance and corporate financial outcomes. Journal of Management Science and Entrepreneurship, 1(1), 21-31. [Google Scholar] [Crossref]

• The Role of Value and Growth Stocks in Portfolio Returns: Insights From the Nigerian Stock Market
• The Impact of Environmental, Social, Governance (ESG) and Profitability on Firm Value Moderated by Firm Size
• Assessment of the Impact of Environmental Operating Costs on Return on Assets: Evidence from Listed Breweries in Nigeria
• Mobile Money and Digital Financial Services Ecosystem in Adamawa State
• A Quantitative Approach of Professional Skepticism and Fraud Detection among Malaysian Internal Auditors