Taxation and Tax Incentive Defined: Promoting the Inflow of Foreign Direct Investment in Nigeria through Taxation

Abstract

In a world where a waxing number of governments contend emulously to attract multinational companies, fiscal policies have become a global phenomenon. Taxation as a critical fiscal policy measure poses as a veritable tool for magnetizing foreign participation, otherwise conceptualized in this context as "foreign direct investment (FDI)", which has been used by several countries in the world to further their economic objectives. The paper in adopting a qualitative research method, examines the sensitivity of foreign direct investment in Nigeria to taxation practices. The paper highlights that the tax incentive policy of the Nigerian tax system is a good driver of foreign investment in Nigeria. While the efficacy of taxation remains questionable, the paper whilst in conclusion recommends a justifiable level of fiscal incentives, and a stable political and economic climate as a panacea in achieving the desired effect.

Keywords: Taxation, Foreign Direct Investment, Tax Incentives and Cost Benefit