The study examined the impact of corporate income tax on the profitability of firms in hospitality industry in Lagos State. The study succinctly explored the effect of corporate income tax on the net profit margin, profit after tax, and cost of operations of the Eko Hotel and Suites, which was used as the sample for the study between 2009 and 2016. Data were sourced from the financial statements of the sampled firm within the period and analyzed via the regression analysis. Results of the study revealed that corporate income tax has significant impact on profit after tax (p<.05); net profit margin (p<.05) and cost of operations (p<.05). Based on this, the study suggests that the government should devise means of eliminating the incidence of double taxation, which tends to weigh down the profitability of private firms in the industry.



Taxes are considered a problem for everyone. Not surprisingly, taxation problems date back to the earliest recorded history. The basic principles of taxation are nearly as old as human society—the history of taxes stretches thousands of years into the past. The earliest trace of taxation in Nigeria was believed to have started from the Northern part of Nigeria and this was before the advent of British administration. The emirs had organized forms of administration and their Islamic relation made it possible for people to contribute towards the charity which laid a solid foundation for direct taxation in Northern Nigeria. Prior in 1900, some of the levies were “Zakat (a tax on the moral property meant for charity), Jangali (tax on livestock), Gado (death tax), Jizjah (tax on slaves), etc these were recognized in the Northern Nigeria, (Onwubiko,1998).

There was also some form of taxes in Southern Nigeria (Yoruba parts) by way of tributes (isakole), tolls, levies, fees and presents given to Obas (Kings), Chief in Benin, Oyo and some other Yoruba Kingdom of Western Nigeria. However in the east, this type of tax-paying tradition was virtually non-existing but except fine called “Iri-iwu” due, mainly to lack of organized central authority. In which the eastern Nigerians are known for their Egalitarian society. These forms of taxation come to a halt with the advent of colonial masters. The Oba’s and emirs were now used in imposing taxation on their subjects and anyone found guilty were punished,(Onwubiko,1998).

 Taxation in modern times is said to be an economic development tool that provides the financial base for providing public goods. It is a double-edged sword depending on what is the interest of the government in power. Also, it is a compulsory payment by individuals and organizations to the relevant inland or internal revenue authorities at Federal, State, or Local Government levels. Taxes perform fiscal or budgetary functions, economic function, and social or redistribute functions.

The hospitality industry which is a broad industry covering various hosting services including restaurants, hotels, bars, cruise lines, and many other related businesses. Globally it is a multi-billion dollar industry with broad offerings, in Nigeria, the best of hospitality development is found in accommodations and restaurants. The hospitality market is booming in Nigeria and with that boom comes newfound diversification in a new range of quality and classifications yet there is much more room for growth, diversification, and standardization,(Oruruo,2014).

In Nigeria, the Corporate Income tax rate is a tax collected from companies. This amount is based on the net income companies obtain while exercising their business activity, normally during one business year.  Revenues from the Corporate Tax Rate are an important source of income for the government of Nigeria It is also an assessment levied by a government on the profits of a company.  Hereby causing an extra reduction in the possible net profit of the company after normal company expenses have been deducted before attaining the net profit it is the further reduction in the net profit which is usually 30% of the net profit assessed on a preceding year basis.


However, Players in the hospitality business in the country have said multiple taxations is stifling the development in the sector. The operators insisted that the current burden of taxes and levies are heavy on them, especially when situated within the context of the high operating cost for business, maintaining that these charges have pushed the sector to the brink. Some of the taxes and levies identified by the operators included Registration of Hospitality Premises, Stamp Duty, Nigerian Social Insurance Trust Fund(NSIT), Industrial Training Fund(ITF), National Pension Commission(PENCOM), Nigerian Tourism Development Corporation(NTDC). Others are Company Income Tax, Withholding Tax, Liquor License, Food Handlers and Health Certificate, Visual Advert, Waste Disposal, Bill Board, Sign Post, Operation Permit, Vehicle Emission Fee, Contravention Charges, Business Premises, Administrative Charges for Environmental, Audit, Copyright Society of Nigeria(COSON), water supply, electricity supply, copious levies by the Local Government Councils as well as other fees charged by regulatory agencies across the sectors at the state and federal levels. Taking a look at all the fees, levies and forms of taxes the companies in the hospitality industry have to pay, not to mention of the corporate income tax they have to pay after ascertaining their net profit, all pose a threat to companies in this sector which is a viable and very profitable industry to venture into. All these pose a threat to these companies because looking at the actual profit and the later deductions there is a wide gap between what they pay as taxes on their profit and the profit they take home.


The aim of this study is to determine the relationship between corporate income tax and the profitability of the hospitality industry in Nigeria. However, the key objectives include;

to examine the relationship between company income tax and cost of operation to ascertain corporate income tax influence on PAT to compare the corporate income tax influence on NPM of accommodation and restaurants


In relation to attaining the set objectives, the study must be able to adequately answer the following questions

To what extent does corporate income tax influence the cost of operations of major sectors in the hospitality industry? Does corporate income tax influence PAT? is there any significant difference in corporate income tax influence and NPM of accommodation and restaurants?


In order to ascertain or accomplish the objectives of this research and provide answers to the research questions, there is a need to establish testable hypotheses.

Hypothesis One

H0: Company income tax does not significantly influence the cost of operations in the hospitality industry

Hypothesis Two

H0: Corporate income tax does not significantly influence the PAT of accommodation and restaurants

Hypothesis Three

H0: There is no significant difference between corporate income tax influence and NPM of accommodation and restaurants


The hospitality business in Nigeria is now peaking at N562 billion as at last year. This was disclosed by SlimTrader, West Africa Vocation Education(WAVE), a technology/e-commerce solution provider, in a chat with Vanguard Femi Akinde, Managing Director, SlimTrader, said:   “The Hospitality industry in Nigeria is worth approximately  N562 billion ($3billion) in 2014 and still growing, (Ekwujuru, 2015) This study, therefore, will be carried out to know the extent to which taxation affects stakeholders in the


This study covers company income tax and profitability of the accommodation and restaurant sub-sectors of the hospitality industry over a period of 5 years.


Companies Income Tax(CIT):

corporate income tax rate is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year

Assessment Authority: 

This is the body appointed by the board for the purpose of assessing tax payable.

Company: A company is defined by section 3(1) of the act as “any co-operation(other than a corporation sole) established by or under any law in force in Nigeria or elsewhere”. The relevant tax authority in respect of company income tax is the Federal Board of inland revenue.

Federal Inland Revenue Sevice (FIRS):-                                                               

This is the body set up by section 5.1 of ITA (1979) and charged with the overall administration of the companies income tax act.

Income:  There is no statement that defines the word `` income`` in taxation status. However, for the purpose of this study reference is made to section 5.4 (2) (6) of income tax management act (ITMA)1961, which recognizes income as including any amount deemed to be income under the act. 

Tax Arrears   These are an assessment of tax during the preceding period whose payment is received at the current assessment period.

Profit After Tax:

The net amount earned by a business after all taxation related expenses have been deducted. The profit after tax is often a better assessment of what a business is really earning and hence can use in its operations than its total revenues.

Net Profit Margin:

The net profit margin is the percentage of revenue left after all expenses have been deducted from sales.


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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper

    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

    This chapter explains the different methods to be used in the research project. Here you mention the procedures and strategies you will employ in the study such as research design, study design in research, research area (area of the study), the population of the study, etc. You also tell the reader your research design methods, why you chose a particular method, method of analysis, how you planned to analyze your data.

    Your methodology should be written in a simple language such that other researchers can follow the method and arrive at the same conclusion or findings.

    You can choose a survey design when you want to survey a particular location or behavior by administering instruments such as structured questionnaires, interviews, or experimental; if you intend manipulating some variables.

    The purpose of chapter three (research methodology) is to give an experienced investigator enough information to replicate the study. Some supervisors do not understand this and require students to write what is in effect, a textbook.

    A research design is used to structure the research and to show how all of the major parts of the research project, including the sample, measures, and methods of assignment, work together to address the central research questions in the study. The chapter three should begin with a paragraph reiterating the purpose of research. It is very important that before choosing design methods try and ask yourself the following questions: Will I generate enough information that will help me to solve the research problem by adopting this method?

    Method vs Methodology

    I think the most appropriate in methods versus methodology is to think in terms of their inter-connectedness and relationship between both. You should not beging thinking so much about research methods without thinking of developing a research methodology.

    Metodologia or methodology is the consideration of your research objectives and the most effective method and approach to meet those objectives. That is to say that methodology in research paper is the first step in planning a research project work.

    Design Methodology: Methodological Approach

    Example of methodology in research paper, you are attempting to identify the influence of personality on a road accident, you may wish to look at different personality types, you may also look at accident records from the FRSC, you may also wish to look at the personality of drivers that are accident victims, once you adopt this method, you are already doing a survey, and that becomes your metodologia or methodology.

    Your methodology should aim to provide you with the information to allow you to come to some conclusions about the personalities that are susceptible to a road accident or those personality types that are likely to have a road accident.

    The following subjects may or may not be in the order required by a particular institution of higher education, but all of the subjects constitute a defensible in metodologia or methodology chapter.

    Click here to complete this article - How To Write Chapter Three Of Your Research Project (Research Methodology)


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