The Effect of Corporate Governance on Tax Planning Strategies: Insights from Firms Listed on the Dar es Salaam Stock Exchange

Abstract

This study examines the role of corporate governance in shaping tax planning strategies among firms listed on the Dar es Salaam Stock Exchange (DSE) in Tanzania. Guided by Agency Theory, the research explores how governance mechanisms such as board independence, audit committees, and CEO duality influence firms' tax practices. A quantitative approach was employed, using secondary data from the financial reports of 83 firms. Regression analysis revealed a strong positive correlation between corporate governance and tax planning, with governance explaining 96.1% of the variance in tax strategies. The results highlight that firms with robust governance structures are more likely to engage in ethical and compliant tax planning, minimizing the risk of aggressive tax avoidance. The study concludes that enhancing corporate governance can improve tax transparency and compliance. It recommends that firms strengthen governance practices and that policymakers provide clearer guidelines to ensure responsible tax management. Future research could explore the interaction between governance and external economic factors such as inflation and regulatory changes.

Keywords:       Corporate governance, tax planning, Dar es Salaam Stock Exchange, tax compliance.