AN EMPIRICAL STUDY ON CORPORATE INVESTMENT PRACTICES AND TAX LIABILITIES IN NIGERIA'S OIL AND GAS SECTOR

Abstract

The study explored the connection between corporate investment practices, specifically capital expenditures and dividend payments, and tax obligations in Nigeria's oil and gas sector. The research is guided by the question: How do corporate investment practices correlate with tax obligations in this sector? Utilizing a correlational research design, the study focuses on eight oil and gas firms quoted on the Nigerian Exchange Group (NGX). Data from the financial statements of these firms were analyzed using Pearson correlation and multiple regression techniques to assess the relationships between current tax liabilities, capital expenditures, and dividend payments. The results suggests that there is no substantial correlation between capital expenditures and current tax liabilities, suggesting that capital investments do not directly influence tax burdens. Also, a substantial positive relationship was found between dividend payments and current tax liabilities, indicating that higher dividend payouts are associated with increased tax obligations. Based on these conclusions, the study suggests that oil and gas firms should diversify and optimize their capital investments without concern for immediate tax impacts and should carefully consider tax-efficient strategies when planning dividend payments to balance shareholder returns with potential tax liabilities