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This research work focused on the effect of corporate tax revenue on economic growth with particular reference to Nigeria manufacturing sector. The researcher to examined the effect of company income tax on gross domestic product in Nigeria. The effect of value added tax (VAT) on gross domestic product in Nigeria. The effect of custom and excise duties on gross domestic project in Nigeria. they made use of E-view in the data analysis. The analysis shows that a one naira change in CIT will increase GDP by 0.737211, while a naira change in VAT will decrease GDP by 3.447379 however, a naira change in CUSEX will increase GDP by 0.795198. In summary, GDP is influenced positively by CIT and CUSEX while it is affected negatively by VAT in varied proportions. The extent of effect of CIT and CUSEX on is positive and insignificant. It was also observed that value added tax (VAT) influences on gross domestic product in Nigeria.  This researcher work also observed that custom and excise duties has significant effect on the gross domestic project in Nigeria. based on the findings, the researcher recommends that The introduction of the Tax Identification Number (TIN) which is a registration and storage of tax payers’ data in Nigeria is a welcomed idea but for it to be successful it should be structured in such a way that will make all potential tax payers liable. Citizens and companies should be able to operate bank accounts only if they have TIN numbers. Government parastatals, multinationals, conglomerates and companies in the country should not engage any vendor who does not have a TIN number. This will go a long way in reducing Tax evasion. All taxes should be remitted via an e-payment system or via direct payment to the various tax authorities’ accounts. This will enhance and support the cashless economy system introduced recently. Tax Clearance Certificates and other tax documents used in government transactions should be referred back to the relevant revenue authority for authentication.






1.1 Background of the study

Tax revenue mobilization as a source for financing development activities in Nigeria has been a difficult issue primarily because of various forms of resistance, such as evasion, avoidance and other form of corrupt practices. These activities are considered as sabotaging the economy and are readily presented as part of the reasons for present state of underdevelopment in Nigeria.

As the Nigerian economy is in the recession period, there are inconsistencies in our tax laws which had made it difficult for the tax body to administer and even for the tax payer to follow.

The federal government had the intension to maintain a uniform tax system but the economic condition of each state has given room for divergence system. The most important thing one should have in mind is that taxation is supposed to be an instrument of social change which it is not answering as much as it should be doing presently in Nigeria. The impact of tax payment is not felt by payee and some do not understand some tax laws and this indeed has put them into doubt and confusion and has definitely made others to want to avoid and evade tax.

Every modern state or nation requires a lot of revenue to be able to provide and maintain essential services for its citizen. One ready means of revenue for the government is through the imposition of tax. The imposition of tax by the government is not a new phenomenon. There is hardly any government today that does not rely on taxation. However, apart from the complications that have crept into the taxation system in modern times, the reason for the imposition of tax in fact ceased to be only for the generation of revenue for the state. It has also become the avenue for the redistribution of wealth and re-adjustment of the economy (Ojo, 2008).

Therefore, the tax system is one of the most powerful levies available to any government to stimulate and guide its economic and social development. The FBIR (Federal Board of Inland Revenue) which is vested with the power to administer the act and carry out all the act which may be deemed necessary and expedient for the assessment and collection of tax ,and shall for all amount so collected in a manner to be prescribed by the Federal Minister of Finance. The Board has certain reserved power which shall not be delegated to any other person to perform, e.g. power to acquire, hold and dispose properties of any company in satisfaction to tax or any judgment debt, and to specify the forms of return claim and notices.

The main forms of tax collected are direct and indirect taxes. For the direct taxes, it is levied on individuals, and factors of productions e.g. Personal Income Tax (PIT), Capital Gain Tax (CGT).

However, indirect taxes are levied on goods and services e.g. import and export duties. Thus, the consumers bear the ultimate burden. Having realized that taxation is one of the most important sources of revenue for the various tiers of the government and a major way of sourcing financial support to the Nigeria government at large, it is of paramount importance that tax evasion and avoidance is discouraged with every conceivable means.

1.2  Statement of Problem

In developing countries, the government has to play an active role in promoting economic growth and development because private initiative and capital are limited. Fiscal policy or budget has become an important instrument in promoting growth and development in such economies.

Taxation is an important part of fiscal policy which can be used effectively by government and developing economies. Taxation play a very vital role in economic development of a country which includes: resources mobilization, reduction in inequalities of income, improvement in social welfare, foreign exchange, regional development, control inflation etc.

According to the classical economist the only objective of taxation was to raise government revenue. But with the change in circumstances and ideologies, the aim of taxes has also been changed. These days apart from the objective of raising the public revenue, taxes level affect consumption, production and distribution with a view to ensuring the social welfare through the economic development of a country, tax can be used as an important tool in the following manner: optimum allocation of available resources, raising government revenue, encouraging savings and investment, acceleration of economic growth, price stability, control mechanism etc. the one and major problem to be address in this work “is the poor fiscal discipline in the allocation of resources and the operation of an ineffective tax regime in Nigeria.’’

1.3  Objectives of the Study

The aim of this research work is to examine the effect of corporate tax revenue on economic growth with particular reference to Nigeria manufacturing sector. The specific objectives of this research work includes the following:

  1. To examine the effect of company income tax on gross domestic product in Nigeria.
  2. To evaluate the effect of value added tax (VAT) on gross domestic product in Nigeria.
  3. To ascertain the effect of custom an excise duties on gross domestic project in Nigeria.

1.4 Research Questions

Based on the objectives of this study, the researcher asked the following questions:

  1. To what extent does custom and excise duties affect the gross domestic product of Nigeria?
  2. To what extent does company income tax affect gross domestic product of Nigeria?
  3. To what extent does value added tax affect the gross domestic product of Nigeria?

1.5  Statement of Hypotheses

Ho: Company income tax does not have any influence on gross domestic  product of Nigeria

H1: Company income tax influences gross domestic product of Nigeria.

Ho: Custom and excise duties do not influence the gross domestic product of Nigeria.

H1: Custom and excise duties influence the gross domestic product of Nigeria.

Ho: There is no significant difference between value added tax and gross domestic product of Nigeria

H1: There is a significant difference between value added tax and gross domestic product of Nigeria


Tax revenue is one of the sources of revenue to the government. This can be used to achieve economic growth and development, maintain equilibrium in the economy by combating elements of depression, inflation or deflation, achieve equity in income and wealth distribution and address issues of poverty and promote socioeconomic development. One of the significance of this research study is to establish at which corporate tax revenue has effect on the economic growth and development in Nigeria.

The research findings would be of importance to policy makers at both state and federal level in the country as they formulate and implement tax and revenue policies. This will provide an insight on how to ensure that tax revenue meets the purpose it intended to achieve. Policy makers, especially the Federal Inland Revenue Service will use the outcome of the study to gauge its performance, and determine the level of input it would have to make to impact positively to the Nigerian economy.

This study will also be of great important to students at various level of learning especially those that intend to carry out further research on this subject. It will students to understand the present effect of Capital Gain Tax revenue on the total revenue of the government of Nigerian and on the economic growth and development.

Also this study will be of great importance to further researchers, scholars and academicians will find the literature arising from the research work to be of great value as it will be added to the existing literature.


A study on the effect of tax revenue on economic growth and development in Nigeria is justified based on the need for the various level of government in Nigeria to ensure continuous economic growth and development through the utilization of tax revenue from various taxes ranging from Petroleum Profit Tax, Company Income Tax, Custom and Excise Duty and Value Added Tax. . The need for this research work can be explained through the unresolved inherent problems associated with administration and collection of capital gain Tax revenue as an instrument for economic growth and development in Nigeria. This research work will go a long way providing an insight to the policies makers in Nigeria on how to ensure the adequate and efficient administration and collection of taxes towards ensuring economic growth and development.


The scope of this study covers the effect of tax revenue on the Nigerian economic growth and development over a period of 20 years (from 1996 to 2016). The trend of Company Income Tax, Petroleum Profit Tax, Customs and Excise Duty and Value Added Tax are examined for the period to determine their correlation with the Nigerian economy growth and development which will be captured as Gross Domestic Product (GDP). The focus will be based on data obtained at the Federal Inland Revenue Service (FIRS) and State Revenue Service.


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