ABSTRACT
The impact or effect of tax incentives and its associated economic and industrial development is studied in this
research project. The study specifically focused on three selected industries (small scale) : Industrial Promoter
Nigeria Limited Aba, Spring Field Nigeria Limited, Deluz Paints Industrial Limited - Enugu
The problem for this research work is to ascertain if the available tax incentives in Nigeria have achieved its
objectives.
The purpose of the study is to establish the type of relationship that exist between tax incentives and growth and
development of small scale industries in the state. To ascertain if really tax incentives stimulate small scale
industries to improve on the level of their investments.
Questionnaires were distributed to the staff, interviews were used to extract information where questionnaire could
not perfectly clarify. Firstly, frequency distribution tables and further, correlation coefficient and chi-square were
used to test hypothesis one and hypothesis two respectively.
A number of findings were made, and it was discovered that small scale industries that benefited from tax incentives
experienced an increase in their productive assets, capital investment and working capital formation. Also, tax
incentives do not only play a stimulant role to the small scale industries but act as an indicator to the industries
signaling them to the specific sector of the economy that should prioritize their investment decision. Among the
findings in the effect of the incentives on the employment level. These incentives influences positively the investment
development that leads to diversification thus increasing employment level.
The researcher further discovered that five year tax relief period for small scale industries is not enough for
realization of the objectives of these schemes.
In view of these findings, the research recommends that the five year tax relief period to small scale industries be
extended to ten year period. This is to ensure that they can favorably content with the competition from bigger firms.
Finally, government should adjust the system of tax administration. The tax administrators should be adequately
educated and more tax enlightenment programs be extended to the public to create enough awareness about the tax
existence and objectives of the tax incentives scheme
