Title page i

Certification ii

Dedication iii

Acknowledgment iv -  v

Table of content vi - viii

Chapter One 1 – 12 

1.1 Introduction

1.2 Statement of the Research Problem

1.3 Aims and Objectives of The Study

1.4 Significances of the Study

1.5 Research Question

1.6 Research Hypothesis

1.7 Scope of the Study.

1.8 Definition of the Key Terms.

1.9 Organization of the study.

Chapter Two 13 – 44 

2.1 Introduction

2.2 Historical Background 

2.3 Government Tax Policy

2.4 Objectives of Taxation

2.5 Principles of Taxation

2.6 Forms of Taxation

2.7 Tax Law in Nigeria

2.8 Tax Administration

2.9 Tax Authorities

2.10 Tax System in Nigeria

2.11 Tax Administration Problems

2.12 Overview of the Nigeria Manufacturing Sector

2.12 Tax Policies and Manufacturing Sector

2.14 Tax Incentives to Manufacturing Companies

2.15 Industrial Constraints

Chapter Three 45 – 51 

3.1 Introduction

3.2 Population.

3.3 Sample Size and Sampling Techniques

3.4 Type and Sources of Data

3.5 Statistical Method of Data Analysis

3.6 Limitation of the Method.

Chapter Four 52 – 64 

4.1 Introduction.

4.2 Data Presentation.

4.3 Data Analysis

4.4 Findings

Chapter Five 65 – 70 

5.1 Introduction.

5.2 Summary of Findings

5.3 Conclusion

5.4 Recommendation

References 71 – 72 

Appendix 73

Questionnaire 74 – 75 



Nigeria the most populous nations in Africa are governed by federal system, hence her fiscal operation also adheres to his same principle. This has serious implication on how the tax policies are structured and operated in the country. The government fiscal power is based on a three-tier structure divided between the federal, state and local government each of which has different tax jurisdiction. As at 2002, about 40 different taxes and levies are shared by all three levels of government.

Since the late 1980s tax policy (a fiscal policy instrument) has become a major tool in Nigeria. The reason for this not for fetched.

First is the need for reconstruction after the civil war, the industrialization strategy adopted by then import substitution industrialization policy. Second reason for the rise in the role tax policy is the falls in the international price oil in the late 1980s this gave rise to the dominance of fiscal policy of which tax policy is major instrument in the management of the economy.

Also the persistent budget deficit since the early 1970s and given the fall in oil revenue made way for the requirement of a new tax focus that saw the emergence of various reforms in tax policy.

However, buy the sector was observed, that the formal private sector was going extinct, economic activities measured by aggregate output, industrial production non-oil exports etc. were all showing distress signs. Above all there were strong and wide evidence of pervasive and decline in the set up of the manufacturing sector leading to reduced  profitability in spite of increase incentives give to the sector by 1986, all socio-economic indicate were pointing toward the downward direction. In sum, there was severe in balance in the sector, it was apparent that the economy required major structural adjustment.

The structural adjustment programme was introduced in 1986 to provide t he conceptual frame work for the government participation in the process of industrialization, tax and related policies fro influencing industrial development. It also desired to achieve high economic growth increase in the share of manufactures.

Just immediately after the introduction of structural adjustment programme it was observed that the reform measure could not be sustained as the out put of the manufacturing sector was responding negatively.

In the recent years, the present civil administration in Nigeria is giving a great deal of Allenton to the manufacturing sector in the eye of various tax policies. Through the manufacturing sector not an exclusively sub-sector in the industrial sector but it is a fact that is largely a major sector in the Nigerian economy. It comprises wide range of enterprise mostly producing consumer goods. In order to move from production of consumer goods. In order to move from production of consumer goods only to production of capital goods a number of incentives were put in place to boost capital stock. It is worthy of note that a number of amendments have been made to some of these tax policies. These include the company income tax act 1990, pioneer legislation, of our basic industries which are expected to promote is an appreciation of this, that government embarked on the development of a number of basic industries such as iron and steel, pulp and paper machine tools, petrol chemicals etc.

Unfortunately, most of these are yet to operate effectively on account of the well known problems of inadequate supply of raw materials, spare parts, infrastructural constraints and weak managerial capacity.

Administrative and institutional bottle needs industrials have persistently complained above the unfavorable investment climate existing in the country, including bottle neck in the administration of various permits and approved for starting and operating business. This bureaucratic bottle neck coupled with economic indiscipline causes a lot inconveniences and administrative delays and all these business in the country. Also, the lack of clarity of government policy of payment of royalties of transferring industrial technology from abroad.

Competition with imported Goods

An important features of capital goods imported into Nigeria is that, they are bought in as fairly use machines, equipment and spare parts. Especially goods produced form these machines and equipment are sub-standard which makes them to be poorly priced if they find their way to the international market, as against higher quality goods form the mere technologically advanced countries. Capital gain tax, import duties and host of others. These amendments are to ensure rapid response to charge in the manufacturing sector.


The character of government tax policy in an important signal to economic agent, despite several tax incentives introduced in the economy and given the importance of a tax policy in the income management in Nigeria, the manufacturing sector in Nigeria is still being characterized by enhancing growth. One could then ask what was the role of tax policy in inducing growth in the manufacturing sector in Nigeria.

What are the objectives of tax policy? What characteristic does the Nigeria government tax policy posses? Can the tax policy be designed to ensure high performance without bringing corresponding instability in the economy?

The high tax regime though claimed to ensure maximum revenue accrue to government is structured in a way t hat is highly characterized by this giving no room for the emergence of new companies and greater performance.

Furthermore, the unpredictable nature of the tax policy frame work paying way of maximization of revenue thus creates a harsh tax climate that encourages evasion. The structures of tariff and double taxation which have encouraged anti-export bias have also left much to be desired companies within the manufacturing sector have now found a way of mitigating the effect of the above mentioned challenges by way of evading tax and this not bring about desirable economic development.

Finally, the attendant problem of lack of sufficient incentive to private enterprises in the form of development rebate, tax holiday, accelerated depreciation allowance, reduced tax related, that ensure manufacturing enterprises are started and expanded within the economy have made the sector remain producers of consumer goods which does not however enhance sustainable economic growth.


The main aim of this study is to assess the government tax policies on the performance of the manufacturing section Nigeria with the specific objectives of:

i. Examine the tax policies in the country

ii. Examine the significance and the contribution of the manufacturing sector to the development of Nigeria economy.

iii. To deal with issues rose in the problem statement.

iv. To examine the effect of government tax policies.

v. To create flora upon which other research work can be based.


In spite of the importance of a result oriented tax policy in the country, attempts have not been made to assess development over the years. The tax system in Nigeria is lopsided. This study is of high importance considering the fact  that it spans through the largest sub-sector in the individual sector of the Nigeria economy there is the strong need to investigate  how tax policies affect this important sector which act as an engine of growth in both developed and the developing countries of the world.


The following research questions are governance to the study and answers sought to them:

1. What are tax policies operating in Nigeria?

2. Has Nigeria tax system functioned effectively and efficiently?

3. Of what importance is the manufacturing sector in the Nigeria economy?

4. What implication does the government tax policy have on the manufacturing sector? 

5. Is the Nigeria tax system properly arranged and administered?


Null hypothesis (Ho): government tax policies do not affect the performance of the manufacturing sector.

Alternative hypothesis: government tax policies affect the performance of the manufacturing sector.


The research work will cover five years financial analysis within this present civilian regime. There are wide and varied policy threat of tax policies, this study focus on company income tax, excise duties and import duties education tax.

However, a major limitations of the study is lack of access data,  this is as a result of some in formation that were classified in the course of the field study. It must also be added that the research work is glimpse of part of possible solution to any interested party on the subject.


a. Tax Authority: This refers to the body of person or person responsible under law of a territory imposing tax on the income of individual for the administration of the law.

b. Capital Allowance: This is claimable on a qualifying capital expenditure QCE. It is usually granted in place of depreciation charges which are normally non-allowable expenses utilize to reduce effectively tax liability.

c. Initial Allowance: It is claimable once on a qualifying capital expenditure in the year when it is first put to use.

d. Annual Allowance: This is claimable annually over the estimated useful life of the qualifying capital expenditure. It is estimated as.

AA =        

e. Balance Adjustment: This is obtained on the disposal of a QCE. It is derived by comparing the sales proceed from disposed will the tax written down value (TWDV) at the time of disposal there are only two possibilities.

Balance allowance: it is obtained where the sales proceed is lower than the tax written down value, it has the same characteristic an unities and annual allowance.

Balance charge: this is obtained where sales proceed exceed the tax written down value, it is an additional taxable profit chargeable to time.

f. Import Duties: these are tax imposed on importation of goods in the nation’s economy as well as manufacturing and sales. It constitutes a major source of revenue to a country.

g. Excise Duties: these are imposed on domestic goods for raising revenue; this though has been abolished in Nigeria.

h. Taxation: this is an act of imposing compulsory terms on eligible citizens, corporate organization etc this is expected to be paid by them.

i. Company Income Tax: this is a charge on the income of a company. It arises on the proceeding year basis at the rate of 30%.

j. Capital Gain Tax: this is changed on the gains arising from the disposable of chargeable asset. It arises on an actual year basis at the rate of 10%.

k. Pioneer Legislation: this is provided for by the industrial development (income tax) act. It encourages companies engaged in peculiar business to be exempted from taxation for a reasonable period of time.

l. Actual Year Basis (AYB): this equivalent to the government fiscal year which commence on 1st January to December 31st.

m. Proceeding Year Basis (PYB): this is a period which must have ended before the beginning of the government tax year. This company tax liability arises on PYB.

n. Education Tax: is charged on the assessable profit of a company at the rate of 20%.


The assessment of government tax policies on the performance of manufacturing sector in Nigeria which has to deal with how tax is being used in the implementation of government policies on the manufacturing sector in Nigeria.

Chapter one of the study deals with the introduction problem statement, the objectives and significance of the study, the research question, research hypothesis and which also state the scope of the study and finally the definition of the terms.

Chapter two lays emphasis on literature review on the study which talk about the historical background of Cadbury Nigeria plc, government tax policy, the objective of taxation, the principles of taxation, also all forms of taxation, tax authorities and tax system and administration problem, furthermore the chapter two also talks about the overview of the Nigeria manufacturing sector, the tax and manufacturing sector, the tax and manufacturing sector, tax incentives to manufacturing companies and lastly industrial constraints.

Chapter three is based on the methodology of research which talks about the introduction, population, sample, size and sampling, the type and source of data, statistical method of method of data analysis is being analysis and the limitations of the method.

Chapter four entails the data presentation analysis and presentation, the introduction which also talks about data presentation, data analysis and lastly findings.

Lastly chapter five deals with summary, conclusion and recommendations.     




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