ABSTRACT
The enabling environment created through generous fiscal policies is expected
to increase the level of foreign private investment in Nigeria beyond the present
level. However, on the contrary what is witness are divestments cum capital
flight out of the country. It is therefore, in line with the above, that this study
seeks to examine the effect of tax incentives on foreign private investment in
Nigeria. Therefore, the objectives of the study, was to examine the extent to
which tax incentives have impacted on foreign private investment in Nigeria, to
examine the impact of tax rate on aggregate foreign private investment in
Nigeria and to examine the relationship between tax rate and foreign private
investment in Nigeria.
The research adopted the ex post facto research designed
which utilised secondary data. The study covers the period 1970 – 2007. The
ordinary least square(OLS) regression analyses was adopted in testing the
hypotheses where the dependent variable was foreign private investment(FPI)
while the independent variable was incentive tax rate(ITR), and Normal Tax
rate(NTR). The result as revealed from the tested from the hypotheses was that
tax incentives rate in Nigeria does not have a positive significant impact on
foreign private investment; Normal tax rate does not have significant impact on
foreign private investment and there is no positive relationship between tax rate
and foreign private investment in Nigeria. Therefore, in line with the findings,
the study recommends that the federal government of Nigeria should seek more
avenues to increase foreign private investment in Nigeria like increased
infrastructure facilities and creating an enabling environment for foreign private
investment in Nigeria.
