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Taxation ordinarily is the imposition of levies on the individuals and corporate bodies in a given state. It is said to be an imposition because of its compulsory nature which of course has received government backing. It is one of the variable instruments of government fiscal policy as it changes with regards to changes in administration. Taxes are broadly grouped into two categories via direct and indirect taxes while the former is a tax levied on goods and services whose final burden are transferred to the consumer. Tax is intended to reveal how the manufacturing sectors will be corrected by the various taxation policy of the government bearing in mind that government desire is to achieve reasonable success of high economic growth with less difficulties the study generally as rated that the annual remover of a manufacturing concern and its ability to make profit pay dividend and plough back part of its profit, pay diverse affected and that such problem like low level of productivity, foreign exchange, low level of capital formation, infrastructural problem and poor research will be encountered. The company bears the entire tax burden as the products elasticity of demand becomes perfectly elasticity of (i.e the company lost as a result of high price on lost as a result of high price on lost as a products, the resource becomes, inelastic. Be that as it to negatively effect. The objective of this study were achieved through the use of personal interview to select management staff different departments from the company on the basis of the conclusion and the understated recommendation were drawn and effectiveness of tax reducing the effect on manufacturing firms especially locally mented when ‘‘Beta Glass Plc, Ughelli.




Title  –        –        –        –        –        –        –        –        –        –        –        –        i

Approval    –        –        –        –        –        –        –        –        –        –        –        ii

Dedication –        –        –        –        –        –        –        –        –        –        –        iii

Acknowledgements     –        –        –        –        –        –        –        –        –        iv

Abstract     –        –        –        –        –        –        –        –        –        –        –        v

Table of Content          –        –        –        –        –        –        –        –        –        –        vi


1.1       Background of the Study-    –        –        –        –        –        –        –        1

1.2       Statement of the Problem    –        –        –        –        –        –        –        3

1.3       Purpose of the Study  –        –        –        –        –        –        –        –        3

1.4       Significant of the Study        –        –        –        –        –        –        –        –        4

1.5       Research Question     –        –        –        –        –        –        –        –        5

1.6       Scope of the Study     –        –        –        –        –        –        –        –        5

1.7       Limitation of the study –        –        –        –        –        –        –        –        6

1.8       Definition of the term   –        –        –        –        –        –        –        –        6


2.1    Introduction         –        –        –        –        –        –        –        –        –        9

2.2    Meaning and Nature of Taxation  –        –        –        –        –        –        10

2.3    Imposition of Income Tax of Company History Background    –        15

2.4    The Objectives of Taxation –        –        –        –        –        –        –        16

2.5    Problems Encouraged By the Manufacturing Sector       –        –        –        18

2.6    Effect of Taxation on the Economy with Emphasis on the

 Manufacturing Sector –        –        –        –        –        –        –        –        22

2.7    Burden of Taxation With Regards To Manufacturing Companies      –        24

2.8    Summary of the Literature Review         –        –        –        –        –        –        29

CHAPTER THREE Research Methodology

3.1    Introduction         –        –        –        –        –        –        –        –        –        30

3.2    Design of the Study    –        –        –        –        –        –        –        –        30

3.3    Area of the Study        –        –        –        –        –        –        –        –        31

3.4    Populations of the Study      –        –        –        –        –        –        –        31

3.5    Sample and Sampling Techniques        –        –        –        –        –        –        32

3.6    Instrumentation –        –        –        –        –        –        –        –        –        33

3.7    Description of the Instrument        –        –        –        –        –        –        –        34

3.8    Validation of the Instrument –        –        –        –        –        –        –        35

3.9    Reliability of the Instrument  –        –        –        –        –        –        –        35

3.10  Questionnaire Administration and Retrieval   –        –        –        –        36

3.11  Techniques of Data Analysis        –        –        –        –        –        –        –        36

CHAPTER FOUR Data Presentation and Analysis

4.1    Introduction         –        –        –        –        –        –        –        –        –        37

4.2    Data presentation        –        –        –        –        –        –        –        –        37

4.3    Data Analysis     –        –        –        –        –        –        –        –        –        41

CHAPTER FIVE Summary of Findings Conclusion and Recommendations

5.1    Summary of finding     –        –        –        –        –        –        –        –        48

5.2    Conclusion         –        –        –        –        –        –        –        –        –        –        49

5.3    Recommendation        –        –        –        –        –        –        –        –        49

Reference –        –        –        –        –        –        –        –        –        –        –        51

Letter of Introduction   –        –        –        –        –        –        –        –        –        52

Questionnaire     –        –        –        –        –        –        –        –        –        –        53






          The role of manufacturing sector cannot over emphasize. It plays considerable role both economic and social development o any nation. The import on any instituted policy on the manufacturing sectors will consequently displays immense effects on the development rate and social life of the people.

          Various governments in Nigeria have various times devised measures to encourage and develop the manufacturing sectors. Precisely, in Abacha’s administration, during his 1998 budgets the head of the state recognized and promised to find MAXIM, and NERFUND, these are bodies responsible to provide loans for small scale industries and also it is a measure for encouragement. This is in consonance with the objective of creating employment through technological and home manufacturing goods. Another motive is discourage our independence on imported goods to improve the balance of payment position, this was why the federal military government, in the 70’s (during “oil boom”) introduced the granting of tax holidays and incentives to manufacturing industries during the early years of commencement of operation.

          The company income tax degree, 1979n also provides for incentives for incentives for such companies. These incentive range from granted of capital allowance of allowable capital expenditure to granting of loss relief.

          The government also grants certain concession to manufacturing industries in the areas of importation of spare parts and raw materials a result of that government measures many manufacturing companies sponge up. This help job creation and rapid economic development in the country.

          As a result of world or that from 1982, Nigeria began to suffer economic depression austerity as a measure was introduction from 1984 to 1985 as result of high position, many manufacturing companies collapsed and many workers were retrenched since then successive government have been trying to stimulate the manufacturing sectors like the pass years, budget 1998. This administration has viewed to provide incentive to business wishing to invest in economic utilization of the gas. The incentive included duly and vat free import of machinery and equipment, tax holiday for five years, zero percentage royally zero percent, petroleum profit tax for used, tax deductible interest on loan for gas projects investment capital allowances, and tax free dividend for a period of five years. The research will therefore, focus its attention to the problem and effect of taxation on the manufacturing sectors of Beta Glass Plc, Ughelli


          It is not disputable that most manufacturing industries such as effect in production.

i.             Indirect tax can influence the supply of recourses for production.

ii.            High taxes for instance can reduce disposable income which will in turn reduce saving and investment.

iii.           Effect on employment- since reduction in tax sets-up a chain of reaction which may lead to increase productivity it may also increase the rate of unemployment in the economy.

iv.          Taxes also influence the location of supply of labour.


The purpose of this is to investigate among other things such as the following:

1.   The effect of direct taxes on the annual turnover of manufacturing concern and their ability to make profit, dividend and plough back part of their profit.

2.   The effects of indirect taxes on the manufacturing concerns in their ability to procure machinery and equipment and also raw-materials.

3.   The effect of taxes on the annual turnover of manufacturing concerns and their ability to make profit.

4.   The effect by the government ensure capacity utilization and efficiency in production


          The relevance of this research study cannot be over emphasized.

1.   This is because it will try as much as possible to highlight the effect created by government use of direct and indirect taxation as tool of economic control and modernization as it affects the manufacturing sector.

2.   Stress the general effects created in the economy as a result of the performance of the manufacturing sector with regards to economics growth and development, make appropriate recommendation on the way of uncovering the manufacturing sector towards capacity utilization transfers innovations, creation of job opportunity and encouragement of indigenous company

3.   The result of this research finding will go a long way to highlight the government and those responsible for fiscal policy

4.   The realities of the economy  and standard of living of the public and the rate of economic development

5.   It will also serve as aid to students and other researcher who wish to extent on the study in future


a.      does the direct taxes on the annual turnover of manufacturing concern influence the industry

b.      does indirect taxes on manufacturing concern influence the industry

c.       does the effort by the government to ensure capacity utilization and efficiency in production influence the industry


          This is to access the effect of taxation on manufacturing industry

Using Beta Glass Plc, Ughelli, as a case study. Which enable the researcher to look into the extent to which government fiscal policy affects, the operation and performance of the manufacturing sector in Nigeria.


1.7    limitation of the study

Because of the limitation time and some constraint such as finance and material, this study ie specifically carried out at ughelli.

        Due to limited time factor and finance available to use in other to ease data collection, this research will be restricted.


          Some terms which were frequently used in this project and some unfamiliar one were defined and explained. These terms includes inflation, deflation, depression and taxation.

1.   Inflation:- Can be defined as sustained rise in price or higher monetary expansion in the economy or a general increase in prices in an economy and consequent fall in the purchase values of money.

2.   Deflation:- This is lower monetary expansion in the economy that is the set of deflation or a general fall in the price level. The opposite of inflation, as with inflation, a general change in the price level should, in theory, have no real effect; however, if traders are holding goods whose prices fall, they may suffer such large losses that they are forced into bankruptcy. However, agents holding money are simultaneously better off, although there may be a lag in increasing expenditure, during which a recession may occur. The only major deflation in the last century occurred during the great depression in the 1920s and 1930. Since then governments have avoided deflation wherever possible.

3.   Depression:- this is a period when there is little economy activity and many people are poor or without job. An extended or sever period of recession. Depressions occur infrequently and some economists believe they occur in long (about 50 years) cycles. The most recent great depression occurred in the 1930s, prior to that they occurred in the periods 1983 – 96, 1844 – 51 and 1810 – 17 depressions are usually associated with falling price (deflation) and large – scale involuntary unemployment. They are often preceded by major financial crashes e.g. the wall street crash of 1929   

4.   Taxation:- A levy on individual or corporate bodies by central or local government in order to finance the expenditure of that government and also as a means of implementing its fiscal policy. Payment for specific services rendered to, or for the payer are not regarded as taxation in the UK, and individual’s income is taxed by means of an income tax (PAYE), while corporations pay a corporation tax. Increase individual wealth is taxed by means of capital gains tax and by inheritance tax. See also direct taxation indirect taxation and value added tax. Or is a compulsory level that is not punitive by the government to the citizens for the provision of social goods and services or public goods and services or jointly used goods and services e.g Road, bridge hospital, defense, education and diplomatic services etc 


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