Amid the Federal Government’s proposed tax reforms targeting Free Trade Zones (FTZs), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has warned that the decision could drive away over $200 billion in foreign direct investments (FDIs) from the country, and jeopardise more than 600,000 jobs.

This was as FTZ stakeholders expressed concern over certain provisions of the Nigeria Tax Bill 2024, seeking to expunge some sections of Acts establishing both the Nigeria Export Processing Zones Authority (NEPZA) and Oil and Gas Free Zones Authority (OGFZA), which provided tax incentives for Special Economic Zones (SEZs) scheme.

The contentious provisions, outlined in the Nigeria Tax Bill 2024, seek to introduce minimum tax rates and remove long-standing tax exemptions for businesses operating within FTZs, a move seen as contradicting Nigeria’s industrialisation and investment objectives.

NACCIMA, in a statement by its National President, Dele Oye, expressed concern over the proposed amendments, particularly Sections 57, 60, 198(2) and 198(3), which threaten to dismantle key incentives that sustained FTZ investments since the scheme was introduced through the Nigeria Export Processing Zones Act in 1992.

He said: “Stripping them of established tax exemptions is a drastic measure that will diminish investor confidence and jeopardise Nigeria’s standing in the global investment community,” said Oye, who is also the Chairman of Nigeria’s Organised Private Sector (OPS).

“With special tax incentives, these zones were designed to attract investment, promote job creation and foster industrialisation. Sections 8 and 18 of the NEPZA Act explicitly exempted approved enterprises from all federal, state, and government taxes, creating an attractive investment environment.”

According to NACCIMA, out of Nigeria’s 50 FTZs, 48 were developed through private-sector investments. “The tax exemptions within these zones have been crucial in attracting investors, creating jobs, and generating over N650 billion in government revenue through Customs duties and related economic activities.”

In response to the growing backlash on the bill, NACCIMA urged the National Assembly to reconsider the proposed tax amendments, emphasising the need for policies that encourage long-term investment rather than deter it.

“This policy summersault through legislation is bound to shake everything in Nigeria, if not carefully handled, as it has already slowed down activities in the FTZs, while potential new investments are held,” Oye stated.

THE FTZ stakeholders urged the Federal Government to only pass tax law that promotes a sustained inflow of both local and foreign investment into the SEZs ecosystem.

Their concern was contained in a communique issued at the end of a two-day Special Economic Zones Annual Meeting organised by the Nigeria Economic Zones Association (NEZA) in Lagos.

The communiqué was signed by the Executive Secretary, Toyin Elegbede, yesterday, in Abuja. NEZA noted the willingness of the Chairman of the Presidential Committee on Fiscal and Tax Reform, Taiwo Oyedele, to engage stakeholders on their concerns with regard to some provisions in the Nigeria Tax Bill 2024 affecting the SEZ scheme as a mark of responsibility to reposition the scheme for greater productivity.

The stakeholders acknowledged the substantial progress already made through the Ministry of Foreign Affairs to reposition the Economic Desk in the country’s Foreign Missions to deliver on Nigeria’s economic priorities and promote foreign direct investment into the SEZs.

They urged SEZs operators to leverage the much-improved collaboration with the Nigeria Customs Service (NCS) to massively produce export-oriented goods meant for the African market and take advantage of the Africa Continental Free Trade Area (AfCFTA) agreement to boost Nigeria’s export earnings.

The communiqué urged the leadership of the association, NEPZA and OGFZA to further engage with the Central Bank of Nigeria (CBN) to finalise on the guidelines for the implementation of off-shore banking in SEZs.