By Ghazali Ibrahim 
The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has sounded the alarm over the federal government’s proposed tax reforms, warning that Nigeria could forfeit over $200 billion in foreign direct investments (FDI) if the changes targeting Free Trade Zones (FTZs) are implemented.
The chamber also cautioned that the policy shift could put more than 600,000 jobs at risk.
The controversial provisions in the Nigeria Tax Bill 2024 aim to introduce minimum tax rates and revoke long-standing tax exemptions for businesses operating in FTZs. This move is seen as a contradiction to Nigeria’s industrialization and investment strategies.
In a strongly worded statement, NACCIMA President Dele Oye expressed deep concerns over sections 57, 60, 198(2), and 198(3) of the bill, which he argues threaten the core incentives that have sustained FTZ investments since the establishment of the Nigeria Export Processing Zones Act in 1992.
He emphasized that eliminating these tax benefits would erode investor confidence and damage Nigeria’s reputation in the global investment space.
Since their inception, Nigeria’s FTZs have significantly contributed to economic growth by attracting investments, fostering industrialization, and creating jobs. The Nigeria Export Processing Zones Authority (NEPZA) Act explicitly exempts businesses in these zones from federal, state, and local government taxes, a key attraction for investors.
However, the proposed amendments seek to dismantle these incentives by enforcing minimum tax rates and scrapping existing exemptions.
According to NACCIMA, Nigeria currently has 50 FTZs, 48 of which were developed through private-sector investments. The chamber noted that these tax-free zones have been instrumental in job creation and have generated over N650 billion in revenue through customs duties and other economic activities.
A major concern raised by NACCIMA is the lack of consultation with key stakeholders before announcing the reforms.
The association stated that companies operating in FTZs were only made aware of the intended amendments on February 20, 2024, when Fiscal Policy and Tax Committee Chairman Taiwo Oyedele disclosed the changes during the Nigerian Economic Zones Association conference.
NACCIMA warns that if the reforms are implemented, Nigeria could face significant capital flight, as businesses might relocate to neighboring countries such as Ghana and Angola, which offer more favorable investment environments.
Historical data from NEPZA and the Oil and Gas Export Free Zone Authority (OGFZA) indicate that these zones have been crucial to revenue generation and economic stability. Removing their tax benefits could lead to severe financial consequences for the nation.
The proposed changes also threaten major FTZ projects like the Lagos Free Zone, home to the Lekki Deep Sea Port, which has played a pivotal role in Nigeria’s maritime sector.
The successful docking of the largest container vessel in Nigeria’s history at the port highlights the importance of maintaining a business-friendly environment to attract further investments.
Oye further argued that altering FTZ incentives would derail Nigeria’s broader economic diversification goals.
He cited examples of other nations, such as the UAE, which offer zero corporate tax rates and strong support for FTZs, ensuring that businesses thrive in a competitive global market.
In response to mounting concerns, NACCIMA has urged the National Assembly to reconsider the proposed tax amendments. The chamber stressed the importance of policies that encourage long-term investments rather than discourage them.
“As NACCIMA, we call on the National Assembly to evaluate the full implications of the Nigeria Tax Bill 2024 on the Free Trade Zone Scheme. This bill could undo decades of progress in attracting foreign investments and building a diversified economy,” Oye stated.
