AN APPRAISAL OF TAXATION AND ITS LEGAL EFFECTS ON FOREIGN DIRECT INVESTMENT IN NIGERIA

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ABSTRACT

 

Principles of taxation, especially international taxation, are one of the instruments through which Foreign Direct Investment, (FDI), is usually attracted to a country. These principles are invariably contained in bilateral or multilateral tax treaties signed between the host countries and the investor countries. The issue for consideration is whether tax treaties between Nigeria and other countries have achieved their desired objectives of attracting foreign direct investment and facilitating economic growth and development. Part of the research problems is how to establish a correlation or nexus between the principles of taxation and foreign direct investment into Nigeria. The aims and objectives of this research are therefore to discuss the impact of taxation on the Nigerian economy and to examine the relationship between the principles of international taxation and foreign direct investment. Consequently, both doctrinal and empirical methods of research are employed in this work. Some of the research findings are that tax treaties between Nigeria and other countries do not have adequate provisions to curb harmful practices like thin capitalization, treaty shopping and tax deferrals, among others. The research then makes recommendations on anti-thin capitalization rules, anti-deferral measures and anti-treaty shopping provisions in the tax treaties between Nigeria and other countries.