In a large mixing bowl, whisk together the milk and egg until well combined. Add the chicken pieces to the mixture, making sure they are completely submerged. Cover and refrigerate for 30 minutes to marinate.
In a shallow dish, combine the flour, salt, black pepper, paprika, garlic powder, and powdered sugar. Mix well to ensure seasonings are evenly distributed.
Heat about 2 inches of vegetable oil in a large frying pan or skillet over medium heat. The oil should reach a temperature of 350°F (175°C).
Remove the marinated chicken from the refrigerator. Dredge each piece in the flour mixture, pressing gently to ensure an even coating.
Carefully place the coated chicken nuggets into the hot oil, without overcrowding the pan. Fry for about 4-5 minutes on each side, or until they are golden brown and cooked through (internal temperature should reach 165°F or 74°C).
Use tongs to transfer the cooked nuggets to a plate lined with paper towels to drain excess oil.
Serve immediately with your favorite dipping sauces.