Question

Since the government of Nigeria is strapped for cash, it has decided to tax all foreign investments (such as oil production equipment) by up to 40 percent of the appraised value. The Nigerian government has found that this is the handiest and quickest means of finding operating funds. The economic risk in discussion here is: A. exchange controls.B. local-content laws.C. tax restrictions.D. tax controls.E. price controls.

Answer 1

D is the correct option.

Step-by-step explanation:

Capital controls are the steps taken by the government, central bank and regulatory bodies for limiting the foreign capital and its flow in the economy. Tax controls are a part of it. The controls include taxes, tariffs and legislation They affect equities, bonds, and foreign investments. They regulate the financial flows in and out of the economy, It restricts the foreigner's ability to buy the domestic assets. It is known as capital flow controls. In developing countries the control is tight.