An Assessment of Agribusiness Tax Incentives in Nigeria
There are several reasons why governments grant tax incentives to businesses. Among other reasons are- regional investment, sectoral investment, performance enhancement, and transfer of technology. Tax incentives have reawaken investors and are extensively used and exploited by agribusinesses in Nigeria to save the agricultural sector from total collapse. Although tax incentives seem to be relevant in promoting the growth of agribusinesses for improved performance, there is growing evidence that short-run gains arising from current deduction of capital expenditure, capital gains income, accelerated depreciation, investment tax credits and tax breaks may adversely affect the financial performance of agribusiness in the long-run. This study therefore assessed agribusiness tax incentives in Nigeria and recommends that tax incentives should be directed at small and growing agribusinesses because they are often short of funds due to their inability to borrow from capital markets. Reduced tax rates or tax holidays may not produce the required results. Measures such as investment tax credits that provide upfront funding might be more effective for agribusinesses in Nigeria.
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