THE IMPACT OF TAX INCENTIVES ON GROWTH AND DEVELOPMENT OF SMALL AND MEDIUM SCALE INDUSTRIES IN NIGERIA. (A CASE STUDY OF INDUSTRIAL PROMOTERS NIGERIA LIMITED, SPRINGFIED NIGER

ABSTRACT 

The impact or effect of tax incentives and its associated economic and industrial development  is studied in this research project. The study specifically focused on three selected industries (small scale) : Industrial Promoter Nigeria Limited Aba, Spring Field Nigeria Limited, Deluz Paints Industrial Limited – Enugu  The problem for this research work is to ascertain if the available tax incentives in Nigeria have achieved its objectives. The purpose of the study is to establish the type of relationship that exist between tax incentives and growth and development of small scale industries in the state. To ascertain if really tax incentives stimulate small scale industries to improve on the level of their investments.  Questionnaires were distributed to the staff, interviews were used to extract information where questionnaire could not perfectly clarify. Firstly, frequency distribution tables and further, correlation coefficient and chi-square were used to test hypothesis one and hypothesis two respectively. A number of findings were made, and it was discovered that small scale industries that benefited from tax incentives experienced an increase in their productive assets, capital investment and working capital formation. Also, tax incentives do not only play a stimulant role to the small scale industries but act as an indicator to the industries signaling them to the specific sector of the economy that should prioritize their investment decision. Among the findings in the effect of the incentives on the employment level. These incentives influences positively the investment development that leads to diversification thus increasing  employment level. The researcher further discovered that five year tax relief period for small scale industries is not enough for realization of the objectives of these schemes.

In view of these findings, the research recommends that the five year tax relief period to small scale industries be extended to ten year period. This is to ensure that they can favorably content with the competition from bigger firms. Finally, government should adjust the system of tax administration. The tax administrators should be adequately educated and more tax enlightenment programs be extended to the public to create enough awareness about the tax existence and objectives of the tax incentives scheme.