Abstract
Recent events in the Nigerian oil and gas industry has called to question the appropriateness of the Nigerian petroleum tax incentives in attracting foreign direct investments into the nation’s oil and gas sector. There were instances of multinational oil companies relocating to other countries due to uncertainty of operating environment. As a result, this study investigates whether the Nigerian petroleum tax incentives package is appropriate in attracting foreign direct investments. Data was collected via a five point Likert questionnaire and analysed using descriptive statistics and Kruskal-Wallis technique. The study revealed, among others, that Nigeria’s petroleum tax incentive package is sufficient in number and appropriate in mix in attracting foreign direct investment. This study concludes that Nigeria’s petroleum tax incentive package is suitable in attracting foreign direct investments. Equally, the study concludes that the tax incentives is sufficient in number and appropriate in mix in attracting foreign direct investments in into the nation’s oil and gas industry Finally, the study recommends further study on other possible ways of attracting inflow of FDI into the Nigerian oil and gas industry. Keywords: Foreign, investments, oil, gas, taxation, incentives JEL Classifications: F21, H21 DOI: https://doi.org/10.32479/ijeep.9187
Highlights
Before the discovery of oil, agriculture had been the main stay of the Nigerian economy contributing about 95% to foreign exchange earnings and 56% to gross domestic earnings (World Bank, 2013)
From Panel A, 87% of the respondents agreed that tax holidays or tax exemptions are effective in attracting foreign direct investments (FDI) into the Nigerian oil and gas industry, while about 7% were neutral and 6% in disagreement
In relation of the expectations of the multinational oil companies (MNOCs), 88% of the respondents disagreed that the number of the incentives offered by Nigeria exceed the expectations of the MNOCs
Summary
Before the discovery of oil, agriculture had been the main stay of the Nigerian economy contributing about 95% to foreign exchange earnings and 56% to gross domestic earnings (World Bank, 2013). Oil became the backbone of the Nigerian economy contributing approximately 90% of foreign exchange earnings and about 80% of government total revenue (Nweze and Edame, 2016). Despite this heavy dependant on oil, Nigeria, like most host developing countries, does not possess the technical knowledge to explore its crude resources. Through its national oil company, Nigeria has been in partnerships with several multinational oil companies (MNOCs) through joint venture and production sharing contracts (Nwokeji, 2007) This arrangement, which stemmed from the lack of technical knowhow, was sponsored by the organisation of petroleum exporting countries’ resolution of 1968 which enjoined member countries to acquire participation in the ownership of the concession-holding companies
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