ABSTRACT: The Nigerian Government had entered into Memoranda of Understandings (MoUs) with the various major International Oil Companies (IOCs) in the 1990s providing incentives to the companies at a period when the Oil market was experiencing oil price recession. The MoUs, amongst other fiscal terms guaranteed the IOCs a minimum profit per barrel of oil produced and a lower tax rate from the standard tax rate prescribed under the Petroleum Profit Tax Act. However, the Nigerian Government has recently indicated its intent to terminate the MoUs and replace it with a standard tax plan. In the light of these recent developments, the paper discusses the fiscal incentives in the framework of these MoUs and their impact on investments and government revenue. The paper analyses the impact of the MoUs using international economic drivers like Foreign Direct Investments (FDI) and contemporary local economic paradigms. The paper concludes by examining the question whether the MoUs as a tax instrument have achieved its objectives.
Available at: http://works.bepress.com/humphrey_onyeukwu/3/