Taxes and Foreign Direct Investment (FDI) in Nigeria

Abstract

This study examines the relationship between the different forms of taxes collected and foreign direct investment in Nigeria. The study adopted the ex-post facto research design and covers a period of thirtyfour years from 1982 – 2015. Secondary data were analysed using the Autoregressive Distributed Lag (ARDL) regression technique. The study found that there is a negative and significant relationship between taxes collected in the form of National Information Development Fund and Education Tax and Foreign Direct Investment. Also, that there exists a positive and significant relationship between Value Added Tax, Companies Income Tax and Foreign Direct Investment, while Petroleum Profits Taxes and Custom and Excise Duties do not influence Foreign Direct Investments in Nigeria. Based on the findings, the study recommends that there is need for government to come up with more friendly economic policies such as tax incentives and macroeconomic adjustments that will enhance continuous increase and growth of the nation's GDP and by implication, attracts FDI into Nigeria.