Abstract:
Tax incentives have become a global phenomenon as more and more governments try to attract multinational companies and enhance the associated technology spillovers. Although hardly new, this trend appears to have strengthened since the early 1990s. The key objective of this study was to establish the effect of tax incentives on foreign direct investment (FDI) in listed Nigerian manufacturing Companies. Specifically, the study established the effect of company income tax incentives; capital allowances incentives, value added tax incentives, capital gains tax incentives , double taxation treaty incentives on the level of foreign direct investment in listed Nigerian manufacturing companies and the effect of non – tax incentives on FDI in listed Nigerian manufacturing companies. This study adopted descriptive research design and the target population of the study was the 74 listed manufacturing companies with approximately more than 56,000 employees. A sample size of 352 respondents from thirty two (32) manufacturing companies was selected from seventy four (74) companies using stratified purposive sampling and respondents were grouped into three strata; that of top, middle and lower management levels. This study used primary and secondary data . The primary data was obtained from administration of the questionnaires and the secondary data obtained from the Central Bank of Nigeria annual reports, financial statements of companies, Nigeria Stock Exchange manuals and National Bureau of Statistics for a period of 10 years (2005 to 2014).Descriptive statistics used were; frequencies, mean and standard deviation, while inferential statistics consisted of regression analysis. The findings in the study revealed that tax incentives have significant positive effect on foreign direct investment in listed Nigerian manufacturing companies. The p -values for all the variables are lower than 0.05. which implies they are significant. Respondents felt intruded when requested to complete a questionnaire that required them to disclose such information. The respondents were assured of confidentiality and ethical handling of the information. There is need to conduct a cost benefit analysis for tax incentives available to various sectors of the economy. Investors should be encouraged to utilise roll over tax relief and bilateral investment treaties should be negotiated and ratified. The positive and statistically significant relationship between the various tax incentives and foreign direct investment implies foreign investors can maximize their investment by taking advantages of the available tax incentivesallowed by the government to create an enabling investment environment.
