Vol. 6, Issue 5 (2020)
An overview of corporate taxation and economic development in Nigeria: A legal approach
Author(s): Kwaghkehe Ierkwagh, Alfred M Tija
Abstract: Corporate taxation plays no less significant roles in development of economies globally. Corporate taxation is a viable source of government revenue and an armoury for management of the economy towards developmental goals. In Nigeria, the government has been consistent in its policy of deliberate regime of tax incentives for stimulation of investment in the manufacturing, agriculture and the gas sub-sectors of the economy. The idea being that a conscious tax incentive regime will positively impact on both domestic and foreign investment, which is a critical factor in economic development. However, Nigeria ranks very low in terms of the desired development. Through the doctrinal research methodology, this paper has found that the regime of tax incentives in the manufacturing, agricultural and gas sub-sector has largely been abused through expatriation of profits, transfer pricing abuse and activities of tax avoiders and evaders. In addition, the government of Nigeria has not demonstrated the required willingness towards budgetary implementation in terms of fiscal policies, thus, denying the country the opportunity of taking advantage of the potential gains of corporate taxation in management of the economy for development purposes. As a way forward, the paper recommends an amendment to corporate laws making it mandatory for companies enjoying tax incentives to remain in the firm for a stipulated minimum period after the expiration of the tax incentive period. Again, a maximum percentage of profits to be expatriated by multinationals benefiting from a tax incentive regime should be considered in the proposed amendments. These, it is hoped will make more meaning and curb the wasteful tax incentive regime and ensure economic development of the country.