Nigeria: Chambers of Commerce Warns Against Taxation of Free Trade Zones. The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has raised concerns over the federal government’s proposal to impose taxes on businesses operating within Free Trade Zones (FTZs).
The association warns that such a move could lead to the loss of $200 billion in foreign investments and put over 600,000 jobs at risk.
The contentious provisions in the Nigeria Tax Bill 2024 aim to introduce minimum tax rates while eliminating long-standing tax exemptions for businesses in FTZs.
NACCIMA argues that this contradicts Nigeria’s industrialization and investment goals, threatening the stability of these economic hubs.
In a statement, NACCIMA’s National President available in the public space, Dele Oye, expressed grave concerns over Sections 57, 60, 198(2), and 198(3) of the proposed amendments, which he believes could dismantle incentives that have attracted investors to Nigeria since the Free Trade Zone framework was established under the Nigeria Export Processing Zones Act in 1992.
“Removing these tax exemptions is a drastic shift that will erode investor confidence and weaken Nigeria’s position in the global investment market,” Oye stated.
FTZs have played a crucial role in Nigeria’s economy by fostering industrialization, job creation, and foreign direct investment.
The tax incentives within these zones have been a primary attraction for investors, facilitating economic activities that have generated over ₦650 billion in government revenue through Customs duties and related financial contributions.
Oye further criticized the lack of consultation with key stakeholders before the proposed tax changes were announced.
He pointed out that FTZ associations and businesses were not officially informed until February 20, 2024, when the chairman of the Fiscal Policy and Tax Committee, Taiwo Oyedele, disclosed the intended amendments during the 3rd Nigerian Economic Zones Association conference.
NACCIMA warns that these tax provisions could drive companies to relocate to more favorable investment destinations such as Ghana and Angola, both of which offer more competitive tax regimes.
Historical data from the Nigeria Export Processing Zones Authority (NEPZA) and the Oil and Gas Export Free Zone Authority (OGFZA) confirm that FTZs have been significant revenue generators for the government. Eliminating tax incentives could halt this revenue flow and trigger wider economic setbacks.
The potential impact extends beyond revenue loss. The proposed amendments to the NEPZA Act could undermine key infrastructure investments, such as the Lagos Free Zone, which houses the Lekki Deep Sea Port.
This facility recently achieved a historic milestone with the docking of Nigeria’s largest container vessel, highlighting the FTZ’s role in enhancing the country’s maritime capabilities.
Oye emphasized that weakening FTZ incentives would hinder Nigeria’s broader economic diversification efforts. He pointed out that global competitors, such as the UAE, offer zero corporate tax rates and strong support systems for businesses within their FTZs.
Without similar incentives, Nigeria risks losing its competitive edge in attracting foreign investments.
In response to mounting concerns, NACCIMA has urged the National Assembly to reconsider the proposed amendments, advocating for policies that encourage long-term investment rather than deter it.
“We call on the National Assembly to thoroughly reassess the Nigeria Tax Bill 2024 and its implications for Free Trade Zones. This legislation could reverse decades of progress in foreign direct investment and economic diversification,” Oye stressed.
He further warned that the policy shift could lead to investment losses, legal disputes, and arbitration cases involving Nigerian entities, banks, and government agencies such as the Nigerian Investment Promotion Commission (NIPC).
While NACCIMA is not calling for a complete reversal of the policy, it recommends delaying the implementation of the proposed tax changes to allow investors to recoup their investments and adjust their business models accordingly.
What Next?
As the debate over the Nigeria Tax Bill 2024 continues, stakeholders will be closely watching the government’s next move to determine the future of Free Trade Zones and their role in Nigeria’s economic growth.
