ABSTRACT

This study examined the effect of tax incentives on foreign direct investment in the petroleum upstream sector in Nigeria with respect shell petroleum Development Company. The study used time series data from 2008-2017 and used the Ordinary Least Square based Simple Regression Method. The findings indicated that; the study also revealed that there is a very high relationship between by tax incentives proxied by (investment tax allowance, non productivity rent, and capital allowance) and the dependent variable that is foreign direct investment. Secondly the study revealed that Investment tax allowance has a significant effect on foreign direct investment, the study further revealed that Non productive rent has a significant effect on foreign direct investment and finally revealed that Capital allowance has a significant effect on foreign direct investment. The study concluded that firms’ enjoying tax incentives will generate more employment opportunities than firms in highly taxed regions. Conducive investment climate is a strong requirement for the flow of sustainable physical investment in an economy. Tax incentives positively influences the living standards and per capital income, and expand variety of goods available to consumers. The study recommends that; i) Tax policies should be designed to eliminate double taxation. ii) Tax incentives should be effectively implemented and efforts should be made by relevant tax authorities to ensure that firms to benefit from these incentives are adequately granted these incentives. iii) Investment climate in the country and state should be made conducive through effective policy formulation, implementation and the provision of equate functional physical infrastructure.