The effect of Taxation on financial performance: the case of Tunisian companies

Abstract This article presents an empirical study of the effect of taxation on the performance of Tunisian companies. The study is based on a sample of 122 large Tunisian companies over the 2015-2019 period. The econometric method used is that of panel data. The results show that corporate income tax, tax incentives, firm size, liquidity, and leverage have significant (negative/positive) effects on the financial performance of Tunisian companies. These results may interest investors, practitioners, and regulators who wish to discover the investment climate in Tunisia. Tax policymakers are urged to lower corporate income tax and maximize the tax incentives to attract domestic and foreign investors. Finally, this paper extends the existing literature by examining the effect of taxation on firm performance in the Tunisian context.JEL Classifications L25; H25; C23.