Nigeria’s Manufacturers Association Supports Tax Reform For Free Trade Zones

The Manufacturers Association of Nigeria (MAN) has thrown its weight behind the proposed reform of free trade zones (FTZs) in Nigeria.

According to MAN’s Director General, Segun Ajayi-Kadir, the reform will ensure a level playing field for all businesses by providing an equitable tax environment.

Currently, companies operating within FTZs are exempt from federal, state, and local government taxes, levies, and rates.

However, this exemption only applies to approved enterprises operating within a zone and does not cover sales to the customs territory.

The proposed reform aims to clarify the tax obligations of companies operating within FTZs. The tax reform bill before the National Assembly seeks to make sales to the customs territory taxable, not just for import duties and VAT, but also for Corporate Income Tax (CIT) purposes.

Ajayi-Kadir believes this reform is necessary to promote fair competition and protect the country’s tax base.

He also noted that the historical context of export processing zones and free trade zones shows their primary goal was to promote manufacturing for exports.

Some of the key incentives available to companies operating within FTZs include:
Tax Exemptions: Approved enterprises operating within a zone are exempt from federal, state, and local government taxes, levies, and rates.
Repatriation of Foreign Capital: Companies can repatriate their foreign capital investment in the zones at any time with capital appreciation of the investment.
Rent-Free Land: Companies can enjoy rent-free land during the construction stage, with rent determined by the Free Trade Zone management thereafter.