Corporate tax policy and economic growth in Nigeria: Evidence from company income tax and petroleum profit tax, 2000–2024

Authors

  • Peter Ohabuenyi University of Nigeria Nsukka, Nigeria
  • Edith Onyeanu University of Nigeria Nsukka, Nigeria

Keywords:

Company Income Tax, Petroleum Profit Tax, Economic Growth, ARDL, Tax Policy, Nigeria

Abstract

This paper examines how sustainable corporate tax policy shapes Nigeria’s economic growth trajectory between 2000 and 2024, with particular attention to Company Income Tax (CIT) and Petroleum Profit Tax (PPT). Anchored on the Ability-to-Pay Theory of Taxation, the study uses annual data from the Federal Inland Revenue Service and the National Bureau of Statistics. The Autoregressive Distributed Lag (ARDL) bounds testing approach is employed to explore both short-run and long-run relationships between effective tax rates and Real Gross Domestic Product (RGDP). The results show that CIT exerts a significant influence on RGDP, suggesting that taxation of corporate profits plays a meaningful role in Nigeria’s growth process. PPT, while positively related to RGDP, does not record a statistically significant effect over the study period. The findings imply that for fiscal policy to deliver sustained growth, CIT should be structured to encourage investment and productivity, while PPT administration should be made more transparent and efficiently managed to translate oil revenues into broader economic gains. The study offers practical insights for policymakers seeking to balance revenue mobilization with growth objectives in a resource-dependent economy.

References

Adekunle, A. M. (2021). Impact of taxation (company income tax) on the growth and development of the Nigerian economy. _Journal of Accounting and Taxation_, 13(1), 1–11. https://doi.org/10.5897/JAT2020.0412

Adegbite, E., & Fakile, A. (2015). The relationship between company income tax and Nigeria’s economic development for the period 1981–2007. _Global Journal of Management and Business Research_, 11(9), 1–5.

Adejare, A. T. (2015). The analysis of the effect of corporate income tax (CIT) on the revenue profile in Nigeria. American Journal of Economics, Finance, and Management_, 1(4), 312–319.

Alhassan, A., Musa, A., & Muhammed, A. (2020). Impact analysis of petroleum profit tax and economic growth in Nigeria. _International Journal of Economics, Commerce and Management, 8(5), 234–245.

Akeem, U. O., & Adejare, A. T. (2015). The impact of petroleum profit tax (PPT) on economic growth in Nigeria: The co-integration analysis. _Proceedings of the 18th International Academic Conference, IISES, London

Central Bank of Nigeria. (2000–2024). Statistical bulletin_. https://www.cbn.gov.ng

Enehe, E. E. (2021). Impact of tax revenue (company income tax) on the Nigerian economy from 1984 to 2018. Journal of Economics and Sustainable Development 12(8), 1–12.

Eregha, P. B., & Mesagan, E. P. (2016). Oil resource abundance, institutions, and growth: Evidence from oil-producing African countries. _Energy Policy 92, 357–372. https://doi.org/10.1016/j.enpol.2016.02.025

Etim, O. E., Nweze, A. U., & Umoffong, N. J. (2020). Petroleum profit tax, company income tax and economic growth in Nigeria 1980–2018. Journal of Accounting, Finance and Auditing Studies, 6(4), 164–187.

Federal Inland Revenue Service. (2024). Company Income Tax (CIT) administration guidelines_. https://www.firs.gov.ng

Federal Inland Revenue Service. (2024). _Petroleum Profits Tax administration guidelines. https://www.firs.gov.ng

Joseph, F. I., Nwankwo, K. C., Ezebunwa, C. U., Omeonu, O. M., & Okechukwu, C. C. (2023). Effect of company income tax on economic growth in Nigeria. _Journal of Accounting and Financial Management 9(12), 45–58.

National Bureau of Statistics. (2000–2024). Annual abstract of statistics_. https://www.nigerianstat.gov.ng

Obaretin, O., & Monye-Emina, H. (2022). Petroleum profit tax and economic growth in Nigeria. Amity Journal of Economics 4(2), 72–82.

Omar, N., Kisaka, S., & Oluoch, O. (2021). Effect of taxation on Kenya's economic growth. Journal of Economic Growth 26(1), 1–15.

Pibowei, W., & Marei, A. (2021). Impact of petroleum profit taxes on economic growth in Nigeria from 1981 to 2020. International Journal of Energy Economics and Policy11(4), 1–10.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics 16(3), 289–326. https://doi.org/10.1002/jae.616

Published

2026-08-29

How to Cite

Ohabuenyi, P., & Onyeanu, E. (2026). Corporate tax policy and economic growth in Nigeria: Evidence from company income tax and petroleum profit tax, 2000–2024. International Journal of Economic Perspectives, 20(8), 952–969. Retrieved from https://ijeponline.lingcure.org/index.php/journal/article/view/1369

Issue

Vol. 20 No. 8 (2026)

Section

Peer Review Articles
Copyright & Licensing

Copyright (c) 2026 Peter Ohabuenyi, Edith Onyeanu

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Allows users to: distribute and copy the article; create extracts, abstracts, and other revised versions, adaptations or derivative works of or from an article (such as a translation); include in a collective work (such as an anthology); and text or data mine the article. These uses are permitted even for commercial purposes, provided the user: gives appropriate credit to the author(s) (with a link to the formal publication through the relevant URL ID); includes a link to the license; indicates if changes were made; and does not represent the author(s) as endorsing the adaptation of the article or modify the article in such a way as to damage the authors' honor or reputation. CC BY