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Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment

Received: 11 May 2017     Accepted: 25 May 2017     Published: 12 July 2017
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Abstract

Governments of different countries have the constitutional backing to impose a plethora of taxes on both local and foreign entities doing businesses in their countries. It is common for a country most especially the developing one like Nigeria to impose all of these taxes instantaneously. Obviously, these taxes have important implications for investment and economic activity, including Foreign Direct Investment. The emphasis of this study is to examine the relationship between multiple taxes and Foreign Direct Investment inflow in Nigeria for the period 1996 to 2015. The study adopted the ex-post facto research design. Secondary data used was collected from Central Bank of Nigeria Statistical bulletins, National bureau of statistics publications and Central Bank of Nigeria Annual Reports. Descriptive analytical procedure and inferential statistics were employed. The descriptive statistics was used in explaining the characteristics of the variables while inferential statistics involved the use of multiple regressions for analysis and time series was used for estimation. From the findings, it is noted that there is an inverse relationship between multiple taxes and Foreign Direct Investment (FDI) in Nigeria; which implies that the higher the taxes, the less the FDI inflows into the country. The given high value of the R2 (0.858333) implies that a 85.83% systematic variation in Foreign Direct Investment (FDI) is explained by company Income Tax (CIT), Value Added Tax (VAT), Education Tax (ED) and Customs and Excise Duties (CED). The F-statistics with the value of 16.96471and P-value of 0.000017 shows that the model easily passes the F-test at 1%, 5% and 10% level of significance and this means that the hypotheses of a significant linear relationship between the dependent and independent variables taken together is validated by this study. It is therefore recommended that for Nigeria to secure a place as an economically viable nation in Africa, it must strive and achieve an internationally competitive tax system by eliminating all forms of multiple taxes in the country.

Published in Social Sciences (Volume 6, Issue 4)
DOI 10.11648/j.ss.20170604.11
Page(s) 91-101
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Foreign Direct Investment, Multiple Taxes, Government, Constitution, Nigeria

References
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Cite This Article
  • APA Style

    Akinwunmi Abiodun Jelil, Olotu Ayooluwa Eunice, Adegbie Folajimi Festus. (2017). Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment. Social Sciences, 6(4), 91-101. https://doi.org/10.11648/j.ss.20170604.11

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    ACS Style

    Akinwunmi Abiodun Jelil; Olotu Ayooluwa Eunice; Adegbie Folajimi Festus. Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment. Soc. Sci. 2017, 6(4), 91-101. doi: 10.11648/j.ss.20170604.11

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    AMA Style

    Akinwunmi Abiodun Jelil, Olotu Ayooluwa Eunice, Adegbie Folajimi Festus. Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment. Soc Sci. 2017;6(4):91-101. doi: 10.11648/j.ss.20170604.11

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  • @article{10.11648/j.ss.20170604.11,
      author = {Akinwunmi Abiodun Jelil and Olotu Ayooluwa Eunice and Adegbie Folajimi Festus},
      title = {Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment},
      journal = {Social Sciences},
      volume = {6},
      number = {4},
      pages = {91-101},
      doi = {10.11648/j.ss.20170604.11},
      url = {https://doi.org/10.11648/j.ss.20170604.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ss.20170604.11},
      abstract = {Governments of different countries have the constitutional backing to impose a plethora of taxes on both local and foreign entities doing businesses in their countries. It is common for a country most especially the developing one like Nigeria to impose all of these taxes instantaneously. Obviously, these taxes have important implications for investment and economic activity, including Foreign Direct Investment. The emphasis of this study is to examine the relationship between multiple taxes and Foreign Direct Investment inflow in Nigeria for the period 1996 to 2015. The study adopted the ex-post facto research design. Secondary data used was collected from Central Bank of Nigeria Statistical bulletins, National bureau of statistics publications and Central Bank of Nigeria Annual Reports. Descriptive analytical procedure and inferential statistics were employed. The descriptive statistics was used in explaining the characteristics of the variables while inferential statistics involved the use of multiple regressions for analysis and time series was used for estimation. From the findings, it is noted that there is an inverse relationship between multiple taxes and Foreign Direct Investment (FDI) in Nigeria; which implies that the higher the taxes, the less the FDI inflows into the country. The given high value of the R2 (0.858333) implies that a 85.83% systematic variation in Foreign Direct Investment (FDI) is explained by company Income Tax (CIT), Value Added Tax (VAT), Education Tax (ED) and Customs and Excise Duties (CED). The F-statistics with the value of 16.96471and P-value of 0.000017 shows that the model easily passes the F-test at 1%, 5% and 10% level of significance and this means that the hypotheses of a significant linear relationship between the dependent and independent variables taken together is validated by this study. It is therefore recommended that for Nigeria to secure a place as an economically viable nation in Africa, it must strive and achieve an internationally competitive tax system by eliminating all forms of multiple taxes in the country.},
     year = {2017}
    }
    

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  • TY  - JOUR
    T1  - Multiplicity of Taxes and Foreign Direct Investment: A Relational Analysis of Nigerian Tax Environment
    AU  - Akinwunmi Abiodun Jelil
    AU  - Olotu Ayooluwa Eunice
    AU  - Adegbie Folajimi Festus
    Y1  - 2017/07/12
    PY  - 2017
    N1  - https://doi.org/10.11648/j.ss.20170604.11
    DO  - 10.11648/j.ss.20170604.11
    T2  - Social Sciences
    JF  - Social Sciences
    JO  - Social Sciences
    SP  - 91
    EP  - 101
    PB  - Science Publishing Group
    SN  - 2326-988X
    UR  - https://doi.org/10.11648/j.ss.20170604.11
    AB  - Governments of different countries have the constitutional backing to impose a plethora of taxes on both local and foreign entities doing businesses in their countries. It is common for a country most especially the developing one like Nigeria to impose all of these taxes instantaneously. Obviously, these taxes have important implications for investment and economic activity, including Foreign Direct Investment. The emphasis of this study is to examine the relationship between multiple taxes and Foreign Direct Investment inflow in Nigeria for the period 1996 to 2015. The study adopted the ex-post facto research design. Secondary data used was collected from Central Bank of Nigeria Statistical bulletins, National bureau of statistics publications and Central Bank of Nigeria Annual Reports. Descriptive analytical procedure and inferential statistics were employed. The descriptive statistics was used in explaining the characteristics of the variables while inferential statistics involved the use of multiple regressions for analysis and time series was used for estimation. From the findings, it is noted that there is an inverse relationship between multiple taxes and Foreign Direct Investment (FDI) in Nigeria; which implies that the higher the taxes, the less the FDI inflows into the country. The given high value of the R2 (0.858333) implies that a 85.83% systematic variation in Foreign Direct Investment (FDI) is explained by company Income Tax (CIT), Value Added Tax (VAT), Education Tax (ED) and Customs and Excise Duties (CED). The F-statistics with the value of 16.96471and P-value of 0.000017 shows that the model easily passes the F-test at 1%, 5% and 10% level of significance and this means that the hypotheses of a significant linear relationship between the dependent and independent variables taken together is validated by this study. It is therefore recommended that for Nigeria to secure a place as an economically viable nation in Africa, it must strive and achieve an internationally competitive tax system by eliminating all forms of multiple taxes in the country.
    VL  - 6
    IS  - 4
    ER  - 

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Author Information
  • Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria

  • Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria

  • Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria

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