The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) and the Organised Private Sector of Nigeria (OPSN) have submitted a memorandum to the National Assembly opposing the proposed taxation of Free Trade Zones (FTZs).
In the memorandum to the National Assembly, NACCIMA and the OPSN called on the National Assembly to remove sections of the Nigeria Tax Bill 2024 that impose new tax burdens on Free Trade Zones
They argued that the proposed changes in the tax bill, which introduce mandatory minimum tax rates and eliminate tax exemptions previously granted under NEPZA and OGFZA, could lead to capital flight, job losses, and legal disputes that would disrupt economic stability.
Dele Kelvin Oye, National President of NACCIMA raised concerns that the bill’s provisions would subject FTZs to state and local government taxes, a departure from the original legal framework that protected these zones from multiple taxation.
Oye, who is also the Chairman of the Organised Private Sector in Nigeria, highlighted key recommendations, including the removal of the proposed tax provisions affecting FTZs, an amendment of the Nigeria Export Processing Zones Authority (NEPZA) and Oil and Gas Free Zone Authority (OGFZA) laws to maintain tax incentives, and a suspension of the new tax laws for 10 to 15 years to allow businesses to adjust their financial models.
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He said, “Today, Nigeria boasts several successful Free Trade Zones, including the Lekki Free Zone, Onne Oil and Gas Free Zone, and others. These zones have collectively attracted over $200 billion in foreign investments and created more than 600,000 jobs.
“They play a pivotal role in Nigeria’s economic growth by enhancing export activities and providing a regulatory framework that facilitates business operations.4. Private Sector Leadership in FTZ Operations. It is vital to highlight that the majority (98%) of the Free Trade Zones in Nigeria are privately owned and developed.
“This demonstrates the inherent capacity of the private sector to drive economic development. The involvement of private entities raises the importance of maintaining a competitive regulatory environment that fosters investment.”
Oye further noted, “The Nigeria Tax Bill 2024 proposes amendments that threaten the operational framework of FTZs by introducing mandatory minimum tax rates and removing existing tax exemptions under NEPZA and OGFZA. These changes are poised to diminish investor confidence and negatively impact long-term investment strategies.”
On Arguments Against the Proposed Tax Amendments, NACCIMA stated, “The proposed changes to the tax regime would lead to loss of Investor Confidence as the removal of foundational tax exemptions can trigger capital flight, as investors may seek jurisdictions with more favorable conditions for business.
On the Economic and Legal Repercussions, Oye said, “These amendments risk the loss of employment opportunities and hinder the growth of domestic industries reliant on FTZs.
“The amendments could incite extensive legal challenges, ultimately destabilizing the existing economic landscape.”
The OPS Chairman further noted, “The significance of Free Trade Zones in Nigeria’s economic landscape cannot be overstated. The proposed amendments within the Nigeria Tax Bill 2024 threaten the existing framework that has successfully drawn significant foreign investments and fostered economic growth. Prompt and decisive action from the Senate is crucial to ensuring stability in this vital sector.
“We urge the Committee to evaluate these concerns and take immediate action to preserve the integrity and attractiveness of Nigeria’s Free Trade Zones for both current and prospective investors.”
“By consolidating NACCIMA’s research, insights, and recommendations, this presentation seeks to encourage measured discussion and legislative action to secure the economic future of Nigeria through its Free Trade Zones,” he added.
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