Original Research Article | OPEN ACCESS

Corporate Taxes on Foreign Direct Investment in Nigeria

For correspondence:-    

Received: September 1, 2019        Accepted: September 21, 2019        Published: September 30, 2019

Citation: Corporate Taxes on Foreign Direct Investment in Nigeria. Account Tax Rev 2004; 3(3):58-68 doi:

© 2004 The authors.
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Abstract

Foreign Direct Investment is a requisite in the development of an economy particularly in emerging markets such as Nigeria which relies mainly on the proceeds from crude oil sales in the international market. A critical factor that influences inflow of foreign direct investment into an economy is the prevailing tax policies in that country. This study therefore examined the effect of corporate taxes on foreign direct investment in Nigeria. Ex post facto research design was adopted as it extracted relevant data from Central Bank of Nigeria Statistical Bulletin and various annual reports of Federal Inland Revenue Service for the period 1985 to 2016, a period of significant deregulation of the economy. The study engaged cointegration regression and unrestricted vector autoregression analysis to estimate the relationship of the variables. The results established that petroleum profit tax and education tax individually has inverse relationship with foreign direct investment while there is direct relationship between company income tax and foreign direct investment in Nigeria. It concluded that jointly, corporate taxes have significant effect on foreign direct investment in Nigeria and recommends that the government should embark on comprehensive tax reform in order to increase the inflow of foreign direct investment.

Keywords: Foreign Direct Investment is a requisite in the development of an economy particularly in emerging markets such as Nigeria which relies mainly on the