Impact of Corporate Tax on Investment Climate of Medium Scale Enterprises: Evidence from Kwara State - Nigeria

Abstract

Over the years, private sector development is acknowledged globally as an appropriate strategy towards employment generation and general economic growth. However, Poor investment climate has been a significant obstacle to the development and sustainability of this sector and this has served as a cog in the wheel of progress of the overall economic development in many developing nations. This study investigates the relationship between corporate tax and medium scale enterprises’ investment in Kwara state. A survey of 120 self- administered questionnaires was undertaking across three manufacturing industries. A total of 80 correctly filled and returned questionnaires were collected and analyzed using simple percentage, onesample t-test, and correlation and regression analyses. All analyses were carried out within the Statistical Package for Social Sciences. From the results of the tested statistics, the four hypotheses were rejected. The results of the hypotheses reveal a coefficient of multiple determinations is 0.830 which implies that about 83.0% of the variation in investment climate is explained by variables in the model. Therefore, each of the variables in the investment climate (stable electricity, road network and access to finance) contributes significantly to investment decision. More so, correlation between Tax Compliance and Tax education equals 0.860 and same holds for Tax Compliance and Tax Campaign = 0.790, and Tax Education and Tax Campaign = 0.596. These correlation coefficients are highly significant as they are close to 1. The study concludes among others that corporate tax to a large extent has effect on capital accumulation, and it influence investment decision in the study area. It is therefore recommended that the government through various agencies should implement tax laws and policies that stimulate the aggregate level of investment in
Kwara state.