THE INTERPLAY BETWEEN TAX INCENTIVES AND FOREIGN DIRECT INVESTMENT IN NIGERIA
Keywords:
Foreign Direct Investment, Privilege Zones. Tax deferrals, Tax Incentives, Tax Subsidies.Abstract
The purpose of this study was to examine the relationship between tax incentives and Foreign Direct Investments in Nigeria. This study adopted an ex-post facto research design and data was gathered from CBN statistical bulletin and annual reports of the Federal Inland Revenue Service for the period of 33 years (1991 to 2023). The Eviews 11.0 econometric software was used to analyse the data that was gathered from the various sources. The results revealed a significant negative impact of Customs and Excise Incentives (D(CED)) on Foreign Direct Investment (FDI) underscores the importance of streamlining administrative processes to reduce the complexities and burdens these incentives may impose on investors. Conversely, the insignificant impacts of Value Added Tax Incentives (D(PPT)) and Company Income Tax Incentives (D(CIT,2)) suggest that these measures alone are insufficient to drive FDI, thereby highlighting the necessity of a holistic approach that integrates these incentives with broader economic strategies. The authors recommended, among others, that, a simplified customs procedure to mitigate perceived complexities and enhance the attractiveness of these incentives to potential investors.
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