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Effect of Tax Revenue Profile on Foreign Direct Investment of Sub-Sahara African Countries

Usman A. O, Fasina H. T, Oyelakin O. T., Oyeleye K. W.

Abstract


The success of any tax system depends on the extent to which it is properly managed, interpreted and implemented. Despite the significant contributions of tax revenue to the economic growth of Sub-Saharan African (SSA) countries, the region still grapples with sluggish economic growth, poverty and inequality. Therefore, this study examined the extent that tax revenue profile influence on Foreign Direct Investment of Sub-Sahara African Countries. The study adopt ex-post facto research design while he population of this study consists of the forty-nine (49) Sub-Sahara countries out of which eight (8) countries were purposively selected as sample study adopted an ex-post facto research design while data were sourced secondarily from the World Bank Africa Development indicators and macro-trend for the period of Twenty-three (23) years (2000-2022) both years included. Panel regression analysis was used to; examine the effect of Tax Revenue Profile (CIT, PPT, PIT, & VAT) on Foreign Direct Investment in Sub-Sahara African Countries The findings from the effect of TRP on Economic Growth of SSA, revealed that CIT (p = 0.000), PPT (p = 0.020) & PIT (p = 0.003) have a significant effect on FDI of SSA. The study therefore recommends that the countries should implement tax reforms, diversify tax revenue streams, invest in tax infrastructure, and encourage foreign direct investment for future purposes.

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References


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