This study examined the impact of petroleum profit tax on economic growth in Nigeria from 1985 to 2023. Therefore, secondary data on petroleum profit tax, real gross domestic product, monetary policy rate and inflation rate were sourced from the statistical bulletin of Nigeria’s apex bank. Error correction mechanism (ECM) technique was used as the main analytical tool. The regression results revealed that petroleum profit tax has a positive and insignificant relationship with economic growth in Nigeria during the period covered by this investigation. At the same time, monetary policy rate has a negative and insignificant relationship with economic growth in Nigeria during the period of study. Also, inflation rate has a positive and insignificant relationship with economic growth in Nigeria during the period of study. Based on the findings, the study concluded that petroleum profit tax as a fiscal policy tool has contributed to economic growth during the period of study but its impact is not meaningful. The study recommended that government should establish an efficient and effective tax administration to increase tax revenue in Nigeria. In addition, government should remove all administrative loopholes; ensure accountability and transparency from government officials on the management of revenue derived from petroleum profit tax. The activities of petroleum exploration companies should be properly checked to achieve optimum collection of taxes payable to the government; and ensure that the needs of the oil producing regions are met for conflict free operation of the oil companies which in turn will increase oil production, petroleum profit tax revenue and economic growth in Nigeria.

Key Words: Petroleum Profit Tax, Economic Growth, ECM and Nigeria