The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has issued a stern warning to the federal government against imposing new taxes on Free Trade Zones (FTZs), cautioning that such measures could drive away foreign investments valued at $200 billion and result in the loss of 600,000 jobs.
The contentious provisions outlined in the Nigeria Tax Bill 2024 aim to introduce minimum tax rates and eliminate long-standing tax exemptions that have been pivotal for businesses operating within these zones. According to NACCIMA, these amendments directly undermine Nigeria’s industrialization and investment objectives.
In a detailed statement, NACCIMA National President, Dele Oye, expressed grave concern over the proposed changes, specifically targeting Sections 57, 60, 198(2), and 198(3) of the Tax Bill. He argued that removing the established tax exemptions, which have been in place since the inception of the FTZ scheme through the Nigeria Export Processing Zones Act of 1992, would significantly erode investor confidence and jeopardize Nigeria’s reputation in the global investment arena.
Oye stressed that these exemptions have been instrumental in attracting investors, creating jobs, and generating more than N650 billion in government revenue through customs duties and related economic activities.
Oye further noted that the vast majority of Nigeria’s 50 FTZs—48 in total—were developed through private-sector investments, highlighting the crucial role that these incentives play in driving economic growth. He warned that the proposed tax changes, which were announced without prior consultation with stakeholders, could lead to capital flight as companies might relocate to neighboring markets such as Ghana and Angola, where the investment climate is perceived to be more favorable.
Criticizing the lack of stakeholder engagement, Oye recalled that the FTZ community was informed by the chairman of the fiscal policies and tax committee, Mr. Taiwo Oyedele, about the impending substantial amendments during the 3rd Nigerian Economic Zones Association conference on February 20, 2024. He lamented that the sudden legislative shift has already slowed activities in the FTZs and threatened to disrupt existing financial arrangements, potentially leading to numerous litigations and arbitrations involving Nigerian companies, banks, and government agencies like the Nigerian Investment Promotion Commission.
NACCIMA called on the National Assembly to reconsider the proposed tax amendments, advocating for policies that encourage long-term investment rather than deter it. While not demanding a complete reversal, the association suggested that the government delay the application of the amendments, allowing investors time to recoup their investments and adjust to a new financial and business model. “Protecting Nigeria’s FTZ framework is not just about retaining tax incentives; it is about ensuring sustained economic growth, job creation, and enhancing our competitiveness on the global stage,” Oye warned.
Ultimately, NACCIMA’s message underscores the importance of a balanced regulatory approach that supports private-sector investment and economic diversification while safeguarding the gains that have been achieved through decades of FTZ incentives.
