Original Research Article | OPEN ACCESS
Thin Capitalisation, Effective Tax Rate and Performance of Multinational Companies in Nigeria

Sunday Otuya1 A. S. omoye2

1Department of Accounting & Finance Faculty of Humanities, Social & Management Sciences, Edwin Clark University, Kiagbodo, Delta State.; 2Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City..

For correspondence:-  Sunday Otuya   Email: otuya.sunday@gmail.com

Received: December 13, 2020        Accepted: March 4, 2021        Published: March 31, 2021

Citation: Otuya S.omoye AS. Thin Capitalisation, Effective Tax Rate and Performance of Multinational Companies in Nigeria. Account Tax Rev 2021; 5(1):45-59 doi:

© 2021 The authors.
This is an Open Access article that uses a funding model which does not charge readers or their institutions for access and distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0) and the Budapest Open Access Initiative (http://www.budapestopenaccessinitiative.org/read), which permit unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited..


How a company is capitalised determines the size of the earnings it reports for tax purposes. Multinational Companies (MNCs) usually can structure their financing arrangements to take advantage of tax laws to enjoy tax benefits. However, some MNCs are folding up their operations while others are relocating to other countries. To this end, this study investigated the thin capitalisation and performance of MNCs in Nigeria. The study adopted the ex post facto research design and obtained relevant data from financial statements of sampled MNCs for the period 2014 to 2018. The study deployed descriptive, correlation and regression analyses as data analytical techniques.  The findings indicated that thin capitalisation, interest expenses rate, effective tax rate, and capital intensity have a positive but insignificant association with MNCs financial performance. The study further revealed that managerial efficiency has a negative but insignificant association with financial performance. The study concludes that thin capitalisation practices enhance the financial performance of multinational companies in Nigeria and recommends that tax authorities initiate tax reforms aimed at reducing the statutory corporate tax rate.

Keywords: Thin Capitalisation, Multinational Companies, International Taxation, Effective Tax Rate, Corporate Performance.

Article Tools

Share this article with

Article status: Free
Fulltext in PDF
Similar articles in Google
Similar article in this Journal:


2022; 6: 
1,   2,   3
2021; 5: 
1,   2
2020; 4: 
1,   2,   3,   4
2019; 3: 
1,   2,   3,   4
2018; 2: 
1,   2,   3,   4
2017; 1: 

News Updates