CHAPTER ONE

INTRODUCTION 

BACKGROUND OF THE STUDY

 The Institute of Chartered Accountants of Nigeria (2006) and the Chartered Institute of Taxation of Nigeria (2002) defined tax as an enforced contribution of money to government pursuant to a defined authorized legislation. In other words, every tax must be based on a valid statute tax can be imposed…TAXATION. To a great extent, taxes influence investment decision in the economy. Decision makers must cope with the complexity of existing tax system. They might be inclined to ignore complicated tax features and rely on statutory tax rates, Azubike (2009). Hence, they may make wrong decision with respect to taxes. According to Devos (2010), a promising way to deal with the complexity of taxes that does not ignore the most important features of tax system beyond statutory tax rates is to use effective tax rates. Effective tax rates comprise the most important elements of a tax system. Such rates are useful for policy makers as well as for business managers, who demand condensed but sophisticated information on investment tax burdens, Devos (2010). However, investment decision often concern infra-marginal, profitable investments. For instance, a multinational corporation would expect to earn an economic rent when deciding the location of a new plant, Abiola & Moses (2012).Therefore, the research focuses on technical and practical issues inherent in the measurement of effective tax burdens in Nigeria…TAXATION