Effects of tax incentives in the development of manufacturing industries in nigeria abstract after the economic depression of the 1930s the concept of economy. Tax laws provide various incentives to companies carrying on business in nigeria incentives may be granted on industry basis or on tax type and may include. To know the general desirability of firms to invest as a result of tax incentives measures. Download undergraduate projects topics and materials accounting, economics, education. Historically, nigerias experience of taxation predates the colonial period. A resident company is liable to tax on its worldwide income being its profits accruing in, derived from, brought into, and received in nigeria. Department of accounting, school of post graduate studies, the university of lagos, akoka, lagos, nigeria. Agribusiness incentives invest in nigeria industrial. Introduction trade incentives, ranging from commissions to volume discounts and rebates, are one of the most popular tools deployed by businesses, to. It will also provide policy makers and analyst with a framework to analysing the usefulness of fdi based on the level of growth involved and suggest reforms to adjust or move towards best practices. Fiscal incentives in nigeria central bank of nigeria. This paper considers two empirical questions about tax incentives. Jul 08, 2017 tax incentives based on tax type as operated in nigeria are as follows.
Jan 22, 2020 in furtherance to the functions of taxation in economic growth and national development, the introduction of tax incentives plays a key role in attracting and retaining investment that will in turn generate more tax revenues. Investment incentives in nigeria embassy of the federal. The impact of tax incentives on foreign direct investment in. For instance, the companies income tax act, cap c21, lfn 2004 cita, permits deduction, from taxable income, of expenses incurred. Pioneer companies investing in specified industrial activities may, on application, be granted a tax holiday for three years initially, which may be extended for up to two years upon satisfaction of specified conditions. Feb 09, 2017 others incentives and fiscal measures approved by the government that favours and encourages large investments in nigeria are. Summary tables for quick reference have been provided on pages 9 to 11, and these have been divided into. The study employed survey research design with the population of 18 local government areas. This workshop examines the key factors for effective tax planning and provides an overview of common tax compliance and incentives strategies 32509. The impact of tax incentives on foreign direct investment.
Empirical evidence on the effects of tax incentives. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. These are mainly fiscal tax non tax and regulatory. Tax incentives are basically designed to attract new investment into the country and to expend existing ones in priori industries which is based on the. Doc tax incentives in the agricultural sector in nigeria. The compendium is a compilation of fiscal incentives in nigerian tax laws and sectorwide fiscal concessions duly approved by the federal. Also, withholding tax rents, interest, and dividends among others was raised from 5 percent to 10 percent in the same 1994 budget. An assessment of agribusiness tax incentives in nigeria. Victor nzeribe subject the question that comes to mind is, how to generate interest and consequently, investment foreign and local in a largely ignored industry plagued with its unique issues, such as illegal mining. Highlighted below are some tax incentives available to companies operating in. All agricultural and agroindustrial machines and equipment enjoy zero percent 0% duty. Data were drawn from annual statistical bulletin of the central bank of nigeria and the world bank world development indicators database. Pdf tax incentives and foreign direct investment in nigeria. Pre 2002 tax reform efforts the federal government had taken farreaching steps aimed at reforming the nations tax system before the pre 2002 reform efforts.
The analysis below demonstrates that tax incentives. Are tax incentives in nigeria attracting investment or. Nigeria to determine the impact of tax incentives on fdi in th e oil and gas sector in nigeria using data for 21 years. General tax based incentives tax based incentives are covered under different laws and in different forms e. Are additional tax incentives needed to stimulate the nigerian mining industry. Excess dividend tax s 19, int eri m d ivid end s s 43. Tax policies and entrepreneurship sustainability in ondo. South africa, nigeria and morocco are notably the only countries in africa that offer cash grants in addition to tax incentives, all of which require prior approval by.
Journal of international business research and marketing. The study focuses on the impact of petroleum profit tax, company income tax, personal income tax, value added tax revenue on nigerias economic growth between 1980 and 20. Though these pillars of taxation still reign supreme, other ancillary motives have been woven into the fabric of the global tax structure. The personentity from taxing trade incentives in nigeria a conundrum. Although tax incentives seem to be relevant in promoting the growth of agribusinesses for improved performance, there is growing. Policies enhancing renewable energy development and.
Those highlighted below have been categorized based on the underlying law. Challenges to effectiveness of fiscal incentives in nigeria72. Excise duties were reintroduced on some products in 1994 and valueadded tax came into effect the same year. Tax incentives have reawaken investors and are extensively used and exploited by agribusinesses in nigeria to save the agricultural sector from total collapse. The companies income tax was enabled by the companies income tax act, chapter 60, lfn 1990. The first part, an overview of the various issues associated with the use of tax incentives, was prepared by donald lecraw, joseph mathews and assad. Effects of tax incentives in the development of manufacturing industries in nigeria with abstract, chapter 15, references and questionnaire. Tax incentives a performance analysis of nigerian tax. Tax incentives based on tax type as operated in nigeria are as follows.
To answer these, we prepared a new dataset of tax incentives in over 40 latin american, caribbean and african countries for the period 19852004. To assess the effect of taxation on savings, and investment in the nigerian economy. Effects of tax incentives in the development of manufacturing industries in nigeria with abstract, chapter 15, references. It is one of 12 country studies in africa and south asia that comprise the main component of an international research project on teacher motivation and incentive. Agriculture sector in nigeria enjoys pioneer status with attendant tax exemption to all companies operating therein. Tax incentives include a 10year tax holiday from profits tax, income tax, remittance tax and customs duties, and tax reduction for shareholders. Compendium of investment incentives in nigeria, october 2017 6 2. The study adopted multistage sampling techniques to select the sample size of nine local government areas that have duly registered small and medium enterprises smes. This study investigates the determinant factors of fdi andanalyse whether or not some selected factors such as tax incentives, availability of natural resources, macroeconomic stability, market size, openness to. A performance analysis of nigerian tax objectives actualization. Tax incentives in west africa 4 this part of the report conducts a brief analysis on another missed opportunity to increase the tax base in ecowas. Effects of tax incentives in the development of manufacturing. Pdf given the significance of foreign direct investment fdi to economic growth and the use of tax incentives as a strategy among government of.
This pervasion in the nigeria tax system has a long history from 1980 to date. This framework referred to as edt, has generated many controversies in the nigerian tax space. Are additional tax incentives needed to stimulate the. Tax incentives and foreign direct investment in nigeria.
Many nations began to implement policy measures aimed at both raising revenue for the government and encouraging investment via investment tax credit. The bill, if successfully passed into law, will significantly change the nigerian tax regime by amending the corporate income tax cit, personal income tax pit, petroleum profit tax ppt, withholding tax, capital gains tax cgt, value added tax vat, customs duties and stamp duties. Aug 14, 2018 for tax incentives specifically, the aim is to analyse the problematic nature of tax incentives and how they contribute to the race to the bottom. The effect of taxation on nigeria economy project topics. Tax incentives and foreign direct investment in nigeria doi. Others incentives and fiscal measures approved by the government that favours and encourages large investments in nigeria are.
Using karl pearson co efficient of co rrelation statistical method of. The nigeria tax system, like any tax system, is a tripartite structure which comprises of. Pdf an appraisal of tax incentives in nigeria chikezie. The companies income tax act has been amended in order to encourage potential and existing investors, investment tax credit at the current rate of 5%. Ugandas tax structure has been greatly improved in recent years, and it appears to mirror the tax system in other.
Tax incentives and the growth of manufacturing firms in nigeria. Vi tax incentives 105 a advantages of tax incentives 107 b limitations of tax incentives of fdi 108 c possible solutions 110 vii conclusions 111 chapter five. Pdf as unclear as the efficacy of tax incentives for the attraction of fdi is, governments especially those of the developing countries have. The study examines the effect of tax policies on the survival of entrepreneurship in ondo state, nigeria. For tax incentives specifically, the aim is to analyse the problematic nature of tax incentives and how they contribute to the race to the bottom. This report assesses the extent to which there is a teacher motivation crisis in nigeria. The bills proposed amendment removes the double taxation caused by edt, thereby encouraging corporate. Nigerias investment tax incentives adam smith in his book, wealth of nations 1776 propounded the equity, certainty, economical and convenience theory of taxation. The following incentives are available in the agriculture sector.
The main objective of the study is to explore the implementation of fiscal incentives in nigeria drawing lessons of experiences from emerging as well as developing economies. Apr 15, 2008 nigeria s investment tax incentives adam smith in his book, wealth of nations 1776 propounded the equity, certainty, economical and convenience theory of taxation. In nigeria, the concept of taxation, especially as it relates to tax incentive had. The study also identified the seemingly lagging sources of nigerias federal revenues and the nonbuoyancy of the total tax revenue is a complete revelation of the. This is an important step in addressing the inefficiency of tax incentives in nigeria and other developing countries, because it will greatly aid in the pursuit of global tax transparency and fairness. Read the brief to find out more on the state of tax incentives in nigeria. Tax policy, tax legislation and tax administration. A countrys tax regime is always a key factor for any business considering moving into new markets. A case in point is kenya and cameroon which provides tax breaks for companies that list on its stock exchange. Tax incentives can induce massive losses of government revenues, and can create tax competition. Companies in the agroallied business do not have their capital allowance restricted. To determine the effects of taxation on employment and salaries of working in nigeria.
Given the significance of foreign direct investment fdi to economic growth and the use of tax. Tax incentives as a catalyst for industrial development and economic growth in nigeria using selected industries and firms in portharcourt, rivers state is that on which the basis are formed, although, many advantages to tax incentives are that they are used for industrial development and economic growth. Tax incentives and foreign direct investment unctad. Are tax incentives in nigeria attracting investment or giving. Tax incentives in nigeria encourages investments completefmc. The study period spans economic cycles for about 66 percent of the life of. Major tax incentives pioneer status incentive 30 export processing zone 31. Vi tax incentives 105 a advantages of tax incentives 107 b limitations of tax incentives of fdi 108.
However, developing countries face numerous tax policy challenges when they attempt to establish efficient tax systems. The study adopted multistage sampling techniques to select the sample size of nine local government areas that have duly registered small and medium enterprises smes under small and mediumscale. Nonnigerian employees of foreign companies in nigeria may be exempt from tax in nigeria, where they spend a cumulative period of less than 183 days in nigeria during a 12 months period, and their income is subject to tax in. Fiscal support can come in various forms which may be from tax exemptions on imported re equipment, to tax holidays on generation incomes. Nigeria has various tax incentives intended to encourage investment in key sectors of the economy, as follows.
This paper attempts to analyse the prospects of agricultural industry in nigeria by an indebt look on the agricultural potential in nigeria ranging from crop production to animal husbandry, the various tax incentives for the agricultural industries. It is instructive to note that most of the incentives provided to enterprises in nigeria come in form of tax reliefs. The tax is chargeable on all companies other than companies engaged in petroleum operations as defined under the ppta registered in nigeria. In furtherance to the functions of taxation in economic growth and national development, the introduction of tax incentives plays a key role in attracting and retaining investment that will in turn generate more tax revenues. The provision of fiscal incentives can address financial barriers to the development of renewables. This tax is enabled by the education tax act of no 7, 1993. The findings also show that companies that are privileged to enjoy tax incentives from the government are willing to pay their taxes as at. Tax incentives are special arrangements in the tax laws to attract, retain or increase. The success and failures of each country and regions were examined through a case study so as to learn some valuable lessons and derive useful implications for the development of renewable energy in nigeria. South africa, nigeria and morocco are notably the only countries in africa that offer cash grants in addition to tax incentives, all of which require prior approval by government.