Corporate Income Tax And Financial Performance Of Commercial Banks In Uganda: A Case Study Of Centenary Rural Developmentbank, Ishaka Branch Bushenyi District

ABSTRACT

The study was carried out on corporate income tax and financial performance of commercial

Banks in Uganda, a case study of Centenary Rural Development Bank lshaka, The research was

conducted basing on two study variables: corporate income tax as an independent variable and

financial performance was the dependent variable, The study was guided by the following

objectives; to evaluate the effects of corporate income tax, level of financial performance and

find out the relationship between corporate income tax and financial performance in Centenary

Rural Development Bank,

Descriptive research design was used during the study because the researcher relied on the

respondents' views and a case of Centenary bank lshaka branch was used to represent

commercial banks and the findings, conclusions and recommendations were generalized to all

commercial banks in Uganda,

The researcher had a target population of 30228 respondents out of which a sample of 395

respondents was selected using Sloven's formula, The data was collected using questionnaire

and interview guide, Both purposive and stratified sampling techniques were used, Cross

sectional research design was used in the study,

Data was analyzed using SPSS and data presented m the in tables using frequencies and

percentages. Pearson correlation coefficient was used to determine the relationship between

corporate income tax and financial performance.

The findings of the study revealed that corporate income tax reduces retained earnings, share

price and loan interest income. The major determinants of bank performance were capital,

liquidity and management. Corporate income tax showed an inverse relationship with financial

performance. The study was based on Equity Theory. It was found that commercial banks only

pay corporate income tax on their profits, not on their revenues. If a bank is just breaking even

and doesn't have any profit left, then corporate income tax is not paid.

The researcher based on the study findings and recommended that Centenary Rural Development

Bank should employ the services of corporate income tax experts to aid in corporate income tax management and also should plan additional ways to increase its profitability.