Effect of Taxation on Foreign Direct Investment in Nigeria

This study examined the effect of taxation on foreign direct investment in Nigeria. The research design that was adopted in this study is the ex-post-facto and longitudinal research design. The study revealed that petroleum profit tax (PPT) has a positive but statistically insignificant relationship with foreign direct investment (FDI) in Nigeria, that company income tax has a negative and significant impact on FDI in Nigeria, that value added tax negatively and insignificantly influences FDI in Nigeria, that capital gains tax is negatively and non-significantly associated with FDI in Nigeria, it was discovered that personal income tax negatively and insignificantly affects FDI in Nigeria, also, the analysis revealed that customs and excise duties are positively and significantly related to FDI in Nigeria, lastly, the study found that tertiary education tax negatively and insignificantly affects FDI in Nigeria. Based on these findings it was recommended that: government to revisit its petroleum tax policies, a lowered tax burden in this sector could act as a catalyst for increased foreign investment, which, in turn, would promote broader economic growth and sectoral development, the government should explore reducing company income tax rates to create a more favorable investment environment, the government should consider reducing VAT rates for industries that are critical to FDI attraction or exempting certain transactions involving foreign enterprises, Lowering capital gains tax rates or introducing exemptions for profits reinvested within Nigeria could encourage greater foreign investment, providing tax reliefs or deductions for expatriate workers could attract highly skilled professionals, facilitating knowledge transfer and contributing to the broader economic and technological development of the country, efforts to streamline customs operations and minimize bureaucratic obstacles would improve efficiency, enabling foreign investors to more easily import essential materials and equipment, thereby supporting the expansion of their operations and boosting the economy and finally the government could explore lowering the tertiary education tax rate or providing targeted exemptions for foreign enterprises that invest in the educational sector.