ABSTRACT

This study examined the impact of Tax incentives on industrial development and economic growth in Nigeria from 1981 to 2015. Data for the study was sourced from CBN statistical bulletin of various issues. Industrial GDP and Nominal GDP were used as proxies for dependent variables while Tax Free Zone (TFZ) Tax Haven Policy (THP) and inflation rate were proxies for explanatory variables. Augmented Dickey Fuller approach was used to test the data for the presence of unit root. Ordinary least squares (OLS) were used for the regression analysis. The findings reveal that sufficient tax incentives enhance industrial and economic growth; with coefficient of determination values of 82.37% and 80.81% respectively for industrial and economic growth models respectively. This study recommends among others that, government should increase tax incentives granted to companies especially to small scale businesses to increase the micro economic growth which in aggregate totals the macro economic growth. This will foster economic growth and encourage new entrepreneurs both foreign and local who will in turn invest in the economy causing an increase in the per capita income and increase in government revenue as a result of more available businesses to be taxed. There should be clearly laid down criteria for tax incentive which should not be ambiguous or difficult to access. The processes and steps to qualify for this tax incentive should be made simple and stringent criteria should be reduced to facilitate and encourage companies taking advantage of this incentive to grow and develop their businesses.