AN EXAMINATION OF THE IMPACT OF NIGERIAN CORPORATE TAX LAW ON INVESTMENT PROMOTION

ABBREVIATIONS

 

AP	Assessable Profit
API	Aid to Pioneer Industries
ATM	Automated Transaction Machines
CAC	Corporate Affairs Commission
CAMA	Companies and Allied Matters Act
CITA	Companies Income Tax Act
CITAA	Companies Income Tax Amend Act
CITO	Company Income Tax Ordinance
CGTA	Capital Gain Tax Act
CDG	Corporate Development Group
CTR	Commonwealth Tax Rate
DTA	Double Taxation Agreements
DTO	Direct Taxation Ordinance
ETA	Education Trust Act
FDI	Foreign Direct Investment

FDIs	Foreign Direct Investments
FIRS	Federal Inland Revenue Service
F.G	Federal Government
GACs	Government Approved Channels
GDP	Gross Domestic Product
IDITRA	Industrial Development (Income Tax Relief) Act
IDITRO	Industrial Development (Income Tax Relief) Ordinance
ISPs	Internet Service Providers
ITOs	Integrated Tax Offices
ITO	Income Tax Ordinance
IDCs	International Drilling Companies
LFN	Laws of the Federation of Nigeria
LRPL	Land Revenue Proclamation Law
LTO	Large Taxpayers Offices
MNCs	Multi- National Companies
NDTA	Nigerian Double Taxation Agreements
NITEL	Nigerian External Telecommunications Limited

NOO	Notice of Objection
NORA	Notice of Refusal to Amend
NRO	Native Revenue Ordinance
NSE	Nigerian Stock Exchange
NTP	National Tax Policy
NTR	Nigerian corporate Tax Rate
OECD	Organization     of    Economic     Cooperation     and Development
PAYE	Pay As You Earn
PITA	Personal Income Tax Act
PPTA	Petroleum Profit Tax Act
PYB	Preceding Year Bases
SMTO	Small and Medium Taxpayers Offices
SSG	Support Service Group
TAT	Tax Appeal Tribunal
TCC	Tax Clearance Certificate
TOG	Tax Operations Group
TNCs	Transnational Corporations

UK	United Kingdom
UNCITR	United Nations Commission on
	International Trade Law
USA	United States of America
WTO	World Trade Organization
WHT	Withholding Tax
VSAT	Very Small Aperture Terminal
VATA	Value Added Tax Act
YOA	Year Of Assessment

ABSTRACT

Companies Income Tax Act (CITA) is the main legislation that governs the taxation of corporations in Nigeria. About one trillion Naira was generated from the tax imposed by the Act in 2013. The amount was equivalent to one fifth of Nigerian federal government budget for that year. The amount could be used by government to perform its duties of providing public services and infrastructures of which investment promotion is included. Investment is very vital to the economic growth of a nation. This is because it creates jobs, alleviates poverty, reduces unemployment and brings foreign capitals. Consequently, government needs to promote investment and advertise for the available investment opportunities in the country. However, there are many factors that are considered by prospective investors before deciding on where to invest their capitals. Corporate tax and the laws governing it are part of them. The main question that comes up here is whether the Nigerian corporate tax law has impact on investment promotion.  In other words, what impact does the law have on investment promotion? Is the law effective in promoting investment in Nigeria? Is there any loophole in the present corporate tax law that discourages investment in Nigeria? Is Nigerian corporate tax incentive regime adequate in curtailing anti-investment attitude in Nigeria? Is there any measure  capable  in  curbing  anti-investment  in  Nigeria?  This  research  entitled  ―An Examination of the Impact of Nigerian Corporate Tax Law on Investment Promotion‖ is an answer to these questions. The main aim of this work is therefore to ascertain the impact of the Nigerian corporate tax law on investment promotion. Thus, it focuses on ascertaining the efficacy of as well as the imperfection in the present corporate tax law in the promotion of investment in Nigeria. Doctrinal method of data collection is adopted. Statutes, books, journal articles and many other documents are used. To ascertain the result of this work, structured interviews with some investors and other stakeholders are conducted. It has been found that the present corporate tax legislation is effective in promoting investment in Nigeria. Constant increase in the number of companies and the amount of investment in the country shows a positive impact of the law on investment promotion in Nigeria. However, the law is not absolutely perfect. It is  plagued  by several problems that have negative impact on the promotion of investment in country. These inter alia include the rate of corporate tax, multiple taxation and non-compliance with the corporate tax law. Others are penalties for violation of the law perpetrated by some dubious companies and mismanagement of fund generated from taxation. To enhance the effectiveness of the law in stimulating more investments domestically and attract more FDIs it is recommended that the rate should be reduced. Multiple taxation should be eliminated and tax avoiders and evaders should be severely punished. Finally provisions of corporate tax penal regime that encourage evasion or avoidance of tax which reduces the government revenue usable for investment promotion should be amended.