Tax Waivers for Multi-Nationals in Nigeria: Are These Based on Economic or Political Reasoning?
Does Nigeria need tax waivers to grow its economy? As reports show the huge losses in tax incentives Nigeria has recorded over the years, the aforementioned question growingly has been a subject of discussion in the economic space, especially in the midst of the recent economic recession. This paper does not focus on this topic only; it extends the analysis by advancing an explanation of the reasoning behind the tax waivers granted to multinational corporations (MNCs). We ask whether the idea behind tax waivers is mainly driven economically or if there are other political (or ulterior) motives behind it. The paper discovers that there is no substantial evidence to prove that the tax waivers are a major driver for Foreign Direct Investment (FDI) into the country. Rather, the system of tax waivers has been a conduit for MNCs to evade taxes and perpetuate corruption in the system. Therefore, the study concludes that, although there are some economic benefits around tax incentives for MNCs, there appears to be more politics around it. Owing to this, the study offers some recommendations on ways to strengthen the tax system and ensure that tax incentives – if they must continue – must serve the purpose for which they are designed and not exploited by foreign companies (and the local collaborators) at the expense of Nigeria.