Factors that affect tax comp liance among small and. Tax incentives and foreign direct investment unctad. A preeminent objective of the ntp remains how to create, deepen and institutionalise in a sustainable manner, a culture of voluntary tax compliance amongst individuals and corporate citizens of nigeria not seek to boost revenue accruable from the informal sector. Look for credits and incentives that benefit your deal. Petroleum profit tax is a tax applicable to upstream operations in the oil industry as it is related to rent, royalties, margin, oil mining prospecting and.
Tax incentives and foreign direct investment in nigeria. 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. Tax incentives and the growth of manufacturing firms in. Pdf effect of tax incentives on foreign direct investment in the. Impact of multiple taxation on small and medium scale. The purpose was to simplify the process so tax collection in nigeria. In nigeria, several booster reliefs are obtainable, but many. It is the most important tax in nigeria in terms of it share of total revenue, contributing over 70% of government revenue and 95%. Pdf tax incentives are quintessential fiscal provisions designed by core.
Tax compliance cost, small and medium scale enterprises and taxation 1. This paper attempts to examine the relationship between value added tax and economic development. This is a strategy that allows the companies under the joint venture jv to enjoy reduced tax rates as a result of the reduction in operational cost arising from per unit cost efficiency. Tax incentives in nigeria a s measured by the annual tax revenue as a percentage of gross domestic. Value added tax and economic development in nigeria. Tax is an important stream of revenue for governments development projects. Activities of nonnigerian companies, which would attract tax in nigeria and other special issues, are spelt out in the laws. Challenges to effectiveness of fiscal incentives in nigeria72.
The questionnaire format adopted was a blend of structured and unstructured. Therefore, this study was conducted using smes in zaria, northcentral nigeria to evaluate and rank the factors that encourage noncompliance with tax obligation by smes. The incentives range from tax exemption to duty drawbacks as well as other forms of grants. New tax incentives for nigerian companies cita exemption of profits order 2012 the president of the federal republic of nigeria has signed into law an order for the part exemption of profits of companies from tax. This is approved for students in accountancy, business, computer science, economics, engineering, arts. Relevance of tax revenue resources to infrastructural.
Get free research paper on impact of multiple taxation on small and medium scale businesses in nigeria project topics and materials in nigeria. Tax incentivesthese are reliefs granted to tax payers or industries in form of an offset from the total profit before tax liability is determined. Though, tax incentives are viewed erroneously as simple incentives with a relatively low compliance burden e. 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. Nigeria also has a regional incentives system that gives allowances ranging. The importance, effect, causes, relationship, comparison, history, role, solutions are discussed. The companies income tax act cita contains a provision titled mining of solid minerals which. All of these are expected to work together in order to achieve the economic goal of the nation. Fiscal incentives in nigeria central bank of nigeria. State internal revenue offices administer personal income tax.
In nigeria for example, such moves do not only entail provision of tax incentives, but also includes awareness campaigns for various incentives aimed at increasing profitability for investors and positioning the country as a sure investment hub. Tax system in nigeria challenges and the way forward 1. Entities that want to merge require some forms of notification and approval from the federal tax authority the federal inland revenue service firs, and other regulators such as the securities and exchange commission sec. We recommend tax compliance simplification and incentives that would assist in reducing smes tax compliance costs in nigeria. Compendium of investment incentives in nigeria, october 2017 5 1. Issn 22221697 paper issn 22222847 onlinevol 3, no 5, 2012 tax system in nigeria challenges and the way forward leyira christian micah ph. Indeed, this year marks the 39th anniversary of export promotion as a formal objective of successive federal governments in nigeria. In response to the transportation fuel supply difficulties in nigeria, the country released the nigerian biofuel policy and incentives in 2007 to create favorable investment climate for the. Individuals resident in nigeria are to pay their taxes to the state\tax office where they are resident on 1 st january of each year.
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. This is an automated tax system and it helps to track the tax position of every nigerian that has the tin and those who do not have are compelled to go for theirs in order to make tax tracking very easy. The compendium is a compilation of fiscal incentives in nigerian tax. Business reorganisation in nigeria key tax considerations. By anticipating this, or other, tax issues in advance and including them in the terms of the offer letter, you can improve your position. Objectives of the study tax incentives is fiscal policy from government to corporate bodies as means of motivating their engagement into manufacturing,investing or even trading and other business activities that can. Capital gains arising from a merger of companies other than those made from the sale.
Pdf this study focused on the effect of tax incentives on foreign direct investment in the petroleum industry in nigeria. Data were drawn from annual statistical bulletin of the central bank of nigeria and the world bank world development indicators database. Tax policy must be generally accepted by the people if it must gain. The impact of tax incentives on economic and industrial development intends to examine the extent individuals and companies have been responding to the incentives scheme. A total of 100 structured copies of questionnaire were distributed to the staff of the selected manufacturing industries. I certify, in accordance with section 2 1 of the acts authentication act, cap. Nigeria has various tax incentives intended to encourage investment in key sectors of the economy, as follows. This perception makes tax incentives more attractive at stimulating the growth and expansion of small and medium enterprises. Pdf an appraisal of tax incentives in nigeria chikezie.
Are additional tax incentives needed to stimulate the. This act may be cited as the value added tax amendment act, 2007. Company income tax is described as tax payable on the profit of any company at a rate of 30% in every year of assessment. This workshop examines the key factors for effective tax planning and provides an overview of common tax compliance and incentives strategies 32509. Highlighted below are some of the issues still faced by the nigerian taxation system and possible way forward. Taxing times ahead, focuses on the challenges ahead but also shows how companies can adapt their tax planning to support the provision of outcomesbased healthcare and remain competitive. In case of industries and firms, tax incentives are given inform of tax holidays which is established by the legislative authorities on such payment of taxes. Tax compliance costs of small and medium scale enterprises. Nigeria government revenues 20102019 data 20202022. Value added tax and economic development in nigeria madugba, joseph ugochukwu1 joseph,u. How these incentives have been stimulating and motivating these bodes on employment opportunities.
A case in point is kenya and cameroon which provides tax breaks for companies that list on its stock exchange. Nigeria has never disguised its desire to promote exports. Azubike1 michael okpara university of agriculture umudike umuahia abia state nigeria. Pdf tax incentives for industry synergy in nigeria. 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. Exporting smes in nigeria bear higher tax compliance cost burden than nonexporting smes. Legal perspective is born out of the desire to examine the problem associated with revenue generation in nigeria and to proffer solution thereto. Investment incentives in nigeria embassy of the federal. Tax incentives in nigeria a s measured by the annual tax revenue as a percentage of gross domestic product gdp is not sig nificantly related wit h fdi iii.
Effect of tax incentives and concession on growth and. D, chukwuma ebere, asian asian umobong department of accounting, faculty of management sciences university of port. Tax incentives and the growth of manufacturing firms in nigeria author uwuigbe uwalomwa, uwuigbe olubukunola ranti, adeyemo kingsley and anowai nnenna chinenye. This study examined the effect of tax incentives on the overall performance of manufacturing industries 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. The companies complained that the tax and royalties being paid eroded their merging of the. Company income tax rates have been successfully used in nigeria that. Tax system in nigeria challenges and the way forward. The objective of this paper was to examine the effect of company income tax incentives on foreign direct investment in. The tax system in nigeria is made up of the tax policy, the tax laws and the tax administration. How ever, in some cases the tax benefits from a corporate combi. 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. Nigeria depends on crude exports for about 70 per cent of government revenue and more than 90 percent of foreign exchange.
Federal, state and local taxing jurisdictions offer a wide array of tax credit and incentive opportunities. Examples are turnkey projects, allocation of income and expenditure between the foreign company and its branch in nigeria, transfer pricing etc. Tax incentives can induce massive losses of government revenues, and can create tax competition. Impact of tax administration on government revenue in a developing economy. Impact of tax administration on government revenue in a. Tax incentives for other lines of trade companies profits in respect of goods exported from nigeria, are exempt from tax provided the proceeds are repatriated to nigeria and used exclusively for the purchase of raw materials, plants equipment and spare parts. Bilateral investment treaties double taxation agreements the agreements make provisions for the elimination of double taxation with respect to taxes on income and capital gains. The study aimed at identifying the effect tax incentives would have on the performance of manufacturing firms. Pdf tax incentives and foreign direct investment in nigeria. Fiscal policy, tax incentives, reinvestment allowance, cash flow, investment tax credit i. Nonresident individuals, staff of the nigerian armed forces, officers of the nigeria foreign services, persons resident within the federal capital. Sunset provisions and evaluation of success of specific tax incentive. Foreign direct investment, tax incentives, nigeria, economic growth. Nasiru ibrahim arab, clerk to the national assembly.