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A theoretical and empirical investigation into the design and implementation of an appropriate tax regime: an evaluation of Nigeria's petroleum taxation arrangements.

Kyari, Adam Konto


Adam Konto Kyari


Alex Russell

Labaran Mohammed Lawal


This thesis provides a structure for understanding the various issues in the design and implementation of a petroleum tax system. Its main objective is to examine whether the Nigerian petroleum tax system is appropriately designed to achieve the benefits the country desires from its petroleum contractual arrangements. Informed by the literature reviewed, economic rent theory was adopted as a theoretical framework in the thesis. While other theories could have been applied as a framework, economic rent theory was deemed to be most appropriate because taxes levied on economic rent are not generally perceived to act as a disincentive to the initiation or continuation of business operations. Informed views on the petroleum fiscal system used in Nigeria were sought from a range of experts in the field via a large scale questionnaire. The empirical data collected were then subjected to statistical analysis to determine the overall response patterns of the respondents for each of the 58 variables surveyed. This analysis enabled tentative conclusions to be drawn about the validity of various hypotheses developed in the thesis. Further analysis was carried out to determine and critically assess statically significant responses between respondent groups. The study revealed that the Nigerian petroleum taxation system was viewed as being well-designed, insofar as it protects the interests of both the government and the international oil companies operating within Nigeria. Furthermore, the expert respondents were of the view that a majority of the measures put in place to ensure compliance with the petroleum taxation system have been effective. However, the study revealed differences in views amongst the various groups of experts to some questions which suggests that some groups may have articulated views based on partisan values. The differences suggest that the different groups may have vested interests in the petroleum taxation system. Given the role these groups play in the petroleum fiscal system in Nigeria, it is argued that these vested interests may well have negatively affected the design and operation of the petroleum fiscal system. This finding may have important implications for the future design and operation of the Nigerian petroleum taxation system. The literature reviewed and survey data analysed resulted in a number of conclusions. First, it is argued that it is very difficult to make a single petroleum tax system that serves the needs of different countries. Second, it is suggested Nigerias petroleum tax regime is predicated upon a desire to capture as much revenue as possible for the government. Third, the thesis concludes that the implementation processes of the Nigerian petroleum tax system are fundamentally weak and require further improvement. Fourth, it is also the conclusion of this thesis that the Nigerian petroleum tax system lacks the capacity for timely review. Finally, it is shown that the Nigerian petroleum tax system is sensitive to changes in tax regulations across oil producing countries.


KYARI, A.K. 2013. A theoretical and empirical investigation into the design and implementation of an appropriate tax regime: an evaluation of Nigeria's petroleum taxation arrangements. Robert Gordon University, PhD thesis.

Thesis Type Thesis
Deposit Date Jul 25, 2013
Publicly Available Date Jul 25, 2013
Keywords Petroleum; Tax; Design; Appropriate; Implementation; Nigeria
Public URL
Award Date Mar 31, 2013


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