Tax policy and foreign direct investment (FDI) in Nigeria

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Date
2015
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Journal ISSN
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Publisher
Kampala International University(KIU)
Abstract
The study investigated the influence of tax incentives, tax rate on the foreign direct investment in the period 1984-2014. The model is derived from eclectic paradigm theory. It can be understood from this theory the main factors that driven FDI inflows have been the need to receive market access, the opportunities presented by large scale privatization process and the degree of political and economic stability. The researcher utilized secondary data of 30 years. Data points and data have been taken from UNICTAD Annual reports World Bank development reports, central bank of Nigeria CBN publication on monetary policy. CBN Annual Report and statement of account and federal ministry of finance reports. The trend of each of the above mentioned construct variables have also been examined in the study to show their movement and changes between (the independent variable) tax policy and foreign direct investment (dependent variable) in Nigeria. The researcher used Pearson Linear Correlation Coefficient (PLCC) and ordinary lenst square (OLS) regression analysis. To examine the trend of the research variables line graphs have been employed. The study findings showed the trend of tax incentive in Nigeria in the study period were fluctuations fi·om time to time. Tax incentives in million of Naira has experienced a decreasing and increasing trend. In summary form tax incentive from 1984-1986 was declining then from 1987-1993 ,,vere a general rising trend of tax incentive in Nigeria. Fluctuations from time as that of tax incenti\'es. [n summary form the FDI intlov, of Nigeria has experienced an increased trends in some shorter year for instance 1992 the FDI inflmv raised to 42, 624from 111, 730 in 1991. The research concluded the tax policy as presented by tax incentives and tax rate ,vhich were the main focus of this study. Based on the research finding the researcher concluded the tax policy presented by tax incentive and tax rate have positive significant effect on FDI ini10\v in Nigeria. The researcher also recommenclecl based on the empirical quantitative analysis that tnx rate has a significant and negative impact on FDI inflow accordingly. lowering tax rate accompanied by tax procedure simplification ,vill increase FDI inflow and a tax incentive policy showed be planned and managed appropriately.
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Keywords
Tax Policy, Tax Policy, Nigeria, Nigeria, Foreign Direct Investment, Foreign Direct Investment
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