The Nigerian Free Zone operators have opposed the Nigeria Tax Bill 2024, warning that the proposed amendments could erode decades of progress in attracting foreign investment, fostering economic growth, and creating jobs within the country’s free trade zones.
Ninety-eight operators and stakeholders convened an emergency meeting to deliberate on the bill, which introduces changes they argue will undermine the viability of the free zone scheme.
In a communiqué sent to THE POINT on Sunday, the operators outlined concerns over provisions that, if passed, would strip free zone enterprises of tax exemptions and incentives.
The stakeholders highlighted the achievements of Nigeria’s Special Economic Zones, noting they have attracted over $300bn in investments, generated N650bn in government revenue, and created over 100,000 direct and 500,000 indirect jobs as of January 2024.
“These achievements are now under threat,” they warned, “despite the federal government’s intent to modernize the tax framework.”
They identified specific sections of the bill—Sections 57, 60, 198(2), and 198(3)—and the Second Schedule, as problematic.
The proposed repeal of Sections 8 and 18(1)a of the Nigeria Export Processing Zones Authority (NEPZA) and Oil and Gas Free Zones Authority (OGFZA) Acts would significantly reduce tax exemptions for free zone enterprises, potentially causing investor confidence loss, capital flight, and economic stagnation.
“By removing these exemptions and protections against levies, duties, and foreign exchange restrictions, the amendments will destroy the attractiveness of free zones. This will lead to massive capital flight, job losses, and a stall in Nigeria’s industrialization and export expansion ambitions,” the operators stated.
The stakeholders emphasized that regulatory certainty is critical for attracting foreign direct investment.
“The sudden withdrawal of incentives, despite the volume of FDI brought into the country based on fiscal promises, is harsh. It creates a negative impression of Nigeria as an investment destination,” they warned.
They added that this abrupt change could lead to legal actions from international investors, a drop in Nigeria’s global ease of doing business ranking, and a diversion of investments to neighboring countries with friendlier policies.
“This will be seen as a classic example of policy somersaults in Nigeria and significantly damage the country’s global reputation,” the communiqué noted.
To mitigate these risks, the stakeholders made several recommendations.
It added, “Expunge Sections 60, 198(2), and 198(3), and exclude free zone enterprises from the scope of Section 57. Retain Existing Incentives: Delete the current Second Schedule of the bill entirely.
“Engage the National Assembly: Mandate the Nigeria Economic Zones Association (NEZA) to present their position to lawmakers and the Minister of Industry, Trade, and Investment.”
“The Federal Government must reconsider this bill. The economic gains achieved through the free zone scheme cannot be sacrificed on the altar of an unbalanced tax reform,” the stakeholders warned.
