Corporate income tax payment and financial performance of people’s bank of Zanzibar

Abstract

The aim of this paper was to examine the effect of corporate income tax payment on financial performance of People’s Bank of Zanzibar PBZ. The study used quarterly secondary data from 2010 to 2019 whereby the unit root test estimation model, Correlation and Regression model based on OLS have been used for estimation in the linear econometric model in which independent variables namely corporate income tax, firm size, growth, and liquidity were examined so as to achieve the stated objective. The results showed that there is a negative relationship between corporate income tax and financial performance of People’s Bank of Zanzibar PBZ, on the other hand firms’ size, and firm growth showed a positive relationship with financial performance. The results further reveal a negative relationship between liquidity and financial performance. The study then recommends among others, People’s Bank of Zanzibar PBZ should employ the services of tax experts to aid them in legal tax planning in order to reduce the net tax payment so as to increase their financial performance.