Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment
Social Sciences
Volume 6, Issue 4, August 2017, Pages: 91-101
Received: May 11, 2017; Accepted: May 25, 2017; Published: Jul. 12, 2017
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Akinwunmi Abiodun Jelil, Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria
Olotu Ayooluwa Eunice, Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria
Adegbie Folajimi Festus, Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria
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Governments of different countries have the constitutional backing to impose a plethora of taxes on both local and foreign entities doing businesses in their countries. It is common for a country most especially the developing one like Nigeria to impose all of these taxes instantaneously. Obviously, these taxes have important implications for investment and economic activity, including Foreign Direct Investment. The emphasis of this study is to examine the relationship between multiple taxes and Foreign Direct Investment inflow in Nigeria for the period 1996 to 2015. The study adopted the ex-post facto research design. Secondary data used was collected from Central Bank of Nigeria Statistical bulletins, National bureau of statistics publications and Central Bank of Nigeria Annual Reports. Descriptive analytical procedure and inferential statistics were employed. The descriptive statistics was used in explaining the characteristics of the variables while inferential statistics involved the use of multiple regressions for analysis and time series was used for estimation. From the findings, it is noted that there is an inverse relationship between multiple taxes and Foreign Direct Investment (FDI) in Nigeria; which implies that the higher the taxes, the less the FDI inflows into the country. The given high value of the R2 (0.858333) implies that a 85.83% systematic variation in Foreign Direct Investment (FDI) is explained by company Income Tax (CIT), Value Added Tax (VAT), Education Tax (ED) and Customs and Excise Duties (CED). The F-statistics with the value of 16.96471and P-value of 0.000017 shows that the model easily passes the F-test at 1%, 5% and 10% level of significance and this means that the hypotheses of a significant linear relationship between the dependent and independent variables taken together is validated by this study. It is therefore recommended that for Nigeria to secure a place as an economically viable nation in Africa, it must strive and achieve an internationally competitive tax system by eliminating all forms of multiple taxes in the country.
Foreign Direct Investment, Multiple Taxes, Government, Constitution, Nigeria
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Akinwunmi Abiodun Jelil, Olotu Ayooluwa Eunice, Adegbie Folajimi Festus, Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment, Social Sciences. Vol. 6, No. 4, 2017, pp. 91-101. doi: 10.11648/
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