The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has issued a warning regarding the Federal Government’s proposed tax reforms targeting Free Trade Zones (FTZs), cautioning that implementing these reforms could lead to the withdrawal of over $200 billion in Foreign Direct Investments (FDI) and place more than 600,000 jobs at risk.
Dele Oye, the National President of NACCIMA, expressed deep concern over the proposed amendments. He emphasized that removing established tax exemptions could erode investor confidence and jeopardize Nigeria’s position in the global investment arena. Oye stated.
Since the inception of the FTZ scheme in 1992, these zones have been pivotal in attracting investments, fostering job creation, and promoting industrialisation. Sections 8 and 18 of the Act explicitly exempt approved enterprises from all federal, state, and local government taxes, creating a favorable investment climate. The proposed amendments, however, seek to introduce minimum tax rates and abolish existing exemptions, a move NACCIMA believes could deter investors.
NACCIMA highlights that out of Nigeria’s 50 FTZs, 48 were developed through private-sector investments. These zones have collectively generated over N650 billion in government revenue through customs duties and related economic activities. The removal of tax benefits could halt this revenue stream and prompt companies to relocate to neighboring countries like Ghana and Angola, with more favorable investment climates.
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NACCIMA urges the National Assembly to reconsider the proposed tax amendments, emphasizing the need for policies that encourage long-term investment rather than deter it. According to Oye, “Protecting Nigeria’s FTZ framework is not just about retaining tax incentives; it’s about ensuring sustained economic growth, job creation, and enhancing Nigeria’s competitiveness on the global stage.”
The association also suggests that if changes to the FTZ tax structure are deemed necessary, the government should provide a transitional period. This would allow investors time to recoup their investments and adjust their financial models accordingly, thereby mitigating potential economic disruptions.
