Tax incentives have
been widely acknowledged as a veritable tool to attract foreign direct
investments (FDI) and influence or encourage certain economic behaviour amongst
tax payers. However, the extant laws and policies on tax incentives in Nigeria
have not yielded expected results in the Nigerian economy in terms of economic
growth, investment strength and competiveness. Rather, several negative implications
have ensued from these policies. This development raises questions as the
effectiveness of Nigeria’s tax incentives laws and policies to meet the fiscal
needs of the Nigerian economy. This article sets out to analyse the policy
flaws of Nigeria’s tax incentives regime in juxtaposition with the principles
of an effective tax policy to determine its level of compliance. It compares
the incentives regime and policy framework in Kenya and Estonia to that of
Nigeria and finds that Nigeria’s laws and policies on tax incentives fall short
of the primary principles of an effective tax policy which are competitiveness
and neutrality. It therefore recommends a tax code restructure and policy
reform that is reflective of these principles and the building of administrative
and infrastructural capacities to incentivize the Nigerian investment landscape
as opposed to the extant method of multiplicity of tax incentives.