Impact of Tax Incentive on Industrial Development in Nigeria: 1985-2019

Abstract

This article investigates the impact of tax incentives on Industrial Development in Nigeria between the periods of 1985 to 2020. Secondary data were sourced from Central Bank of Nigeria, National Bureau of Statistics and Federal Inland Revenue Services on Gross Domestic Product (GDP), Company Income Tax (CIT), Value Added Tax (VAT) and Industrial Output (IoP) using a multiple regression technique of econometrics via E-view 9.0. We tested for unit root to ascertain the status of the data, used co-integration test to establish the long run relationship and applied the ARDL estimation technique to establish the impact of the explanatory variables on the dependent variable. The result showed that company income tax has a negative impact on industrial
development while the lag of industrial output, value added tax and gross domestic product has a positive impact on the industrial output during the periods under study. We recommend among others that certain taxes should be waived for firms at the early stage of their takeoff and available tax incentives should be legalized and made known to all.