A model for foreign direct investment (FDI) promotion through standardized tax policies in Nigeria

Abstract

This paper presents a model for promoting Foreign Direct Investment (FDI) in Nigeria through the implementation of standardized tax policies. The model seeks to address the inconsistencies in Nigeria’s tax framework that hinder the inflow of foreign investments. By proposing a streamlined, transparent, and investor-friendly tax regime, the model aims to attract and retain foreign investors while fostering economic growth. The model emphasizes the importance of harmonizing tax policies across federal, state, and local levels to eliminate discrepancies that create uncertainties for investors. It advocates for clear and consistent tax incentives tailored to sectors with high FDI potential, such as manufacturing, agriculture, and technology. Additionally, the model calls for the reduction of bureaucratic inefficiencies in tax administration, which often discourage foreign investors due to delays and lack of transparency. A key component of this model is the establishment of a centralized digital platform for tax registration and compliance. This system would streamline tax processes, ensuring clarity in tax obligations, reducing corruption, and improving ease of doing business. Furthermore, the model promotes the creation of bilateral tax treaties that protect foreign investors from double taxation, enhancing Nigeria’s global competitiveness as an FDI destination. The paper also underscores the role of tax reforms in promoting investor confidence, advocating for a consultative approach where investors, policymakers, and industry stakeholders collaborate to shape tax policies. By implementing this model, Nigeria could see a significant increase in FDI inflows, which would contribute to job creation, infrastructure development, and technology transfer, ultimately leading to long-term economic stability.