Regulatory Quality as a Moderator between Tax Incentives and Economic Growth in Nigeria

Despite numerous tax incentives introduced by successive Nigerian governments to stimulate investment and accelerate economic growth, the expected outcomes have remained elusive. This persistent gap raises concerns about the quality of regulatory institutions in facilitating the effectiveness of such fiscal policies. This study examines the moderating effect of regulatory quality on the relationship between tax incentives and economic growth in Nigeria. The purpose is to determine whether strong regulatory frameworks enhance the efficacy of tax incentives in driving sustainable economic performance. Employing a quantitative research design, the study uses secondary data spanning 1999–2024 sourced from the Central Bank of Nigeria, Federal Inland Revenue Service, and World Bank governance indicators. The data are analyzed using panel regression and moderated interaction models to assess both direct and moderating effects. The findings reveal that while tax incentives exert a positive but statistically weak impact on economic growth, regulatory quality significantly strengthens this relationship, indicating that the effectiveness of incentives depends heavily on institutional efficiency, transparency, and enforcement capacity. The study is limited by its reliance on macro-level data, which may mask sector-specific dynamics. Practically, the research underscores the need for policymakers to couple fiscal incentives with institutional reforms to achieve developmental goals. Socially, improved regulatory quality enhances investor confidence, fosters inclusive growth, and reduces inequality. The study contributes original insights to the fiscal policy literature by empirically demonstrating the moderating role of regulatory quality in Nigeria’s tax-growth nexus.