Over 90 Free Zone operators in Nigeria have voiced strong opposition to the provisions of the Nigeria Tax Bill, 2024, expressing concerns that its implementation would negatively impact the country’s free trade zones, potentially leading to a loss of investments, capital flight, and job cuts.
In an emergency stakeholders’ meeting convened to discuss the bill, the operators highlighted how key provisions in the proposed law, such as changes to tax exemptions and incentives for free zone enterprises, could undermine foreign investments and the significant economic growth the zones have helped foster. The operators fear the bill could distort the achievements made by the free zones, despite the government’s intentions to modernize and consolidate the tax framework.
As of January 2024, Nigeria’s Special Economic Zones (free trade zones) had attracted over N300 billion in investments, generated N650 billion in government revenue, and created more than 100,000 direct jobs, along with 500,000 indirect jobs. The operators believe the tax bill would jeopardize these gains.
The stakeholders specifically raised concerns about Sections 57, 60, 198(2), and 198(3) of the bill, which they argue would revoke long-standing tax exemptions and incentives that have been central to the operations of free zone enterprises. The operators warn that removing these tax exemptions and protections against levies, duties, and foreign exchange restrictions would significantly reduce the attractiveness of Nigeria’s free zones to international investors, potentially resulting in massive capital flight and job losses.
The communique further pointed out that the bill’s provisions would effectively reverse policies that were established decades ago, which had allowed free zone enterprises to sell up to 100 percent of their products into the Nigerian Customs Territory, upon payment of appropriate customs duties. The operators argue that the bill’s restrictions, based on a misinterpretation of the law, fail to acknowledge previous approvals granted by the government.
The stakeholders emphasized that regulatory certainty is crucial for attracting investment, and the sudden withdrawal of incentives could damage Nigeria’s reputation as an investment destination. They warned that such a move could prompt legal challenges from international investors and lead to a decline in Nigeria’s global business ranking, resulting in the diversion of investments to other countries with more favorable policies.
In response, the Free Zone operators called on the Federal Government to reconsider the bill, particularly Sections 60, 198(2), and 198(3), and to exclude free zone enterprises from the scope of Section 57. They also urged for the removal of the Second Schedule of the bill, stressing the importance of consulting with free zone stakeholders to avoid undermining the success of the scheme.
The operators concluded by warning that the proposed tax changes could harm Nigeria’s ongoing economic reforms, damage the country’s global investment standing, and lead to a significa
