The Impact of Tax Policy and Incentives on Foreign Direct Investment (FDI) and Economic Growth: Evident from Export Processing Zones

Abstract- This study focuses on the impact of tax policy and incentives on Foreign Direct Investment (FDI) and economic growth: Evident from Export Processing Zones (EPZS) in Nigeria. Many state governments face pressure to sweeten investment tax incentives programs to compete with tax breaks offered elsewhere. At the same time, they are pressed to strengthen revenues, to finance essential public goods and services. The challenges are to understand the conditions and the policy design features that determine whether tax incentives are likely to deliver substantial and sustainable net benefits. Data were collected through questionnaire and analyzed using ordinary least square techniques. The study revealed that tax rates have a significant relationship to FDI and economic growth. The study therefore recommended that there should be an abolition of exonerations, despite finding a determinant role of the fiscal and financial incentives on the development and growth of private investment, particularly in the export processing sector. Index Terms — Export processing zones, Foreign country