Two prominent organizations within Nigeria’s Organized Private Sector (OPS), the Manufacturers Association of Nigeria (MAN) and the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), have articulated differing positions regarding the proposed 2024 Tax Bill amendments related to Free Trade Zone (FTZ) operations in Nigeria.
During the 3rd Nigerian Economic Zones Association conference, Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policies and Tax Reforms Committee, conveyed the intention to make significant amendments to the regulations governing investment in FTZs.
Given their influential roles in the private sector, one might have anticipated a unified stance from MAN and NACCIMA on these tax amendments; however, their responses reflect a divergence of opinion.
MAN has voiced support for the proposed reforms, emphasizing their potential to create a more equitable tax environment.
Segun Ajayi-Kadir, the Director-General of MAN, articulated that these changes would ensure fair tax treatment for both companies in the customs territory and those operating within FTZs concerning sales to the customs territory.
This, he believes, would foster healthy competition while safeguarding the nation’s tax base.
During the 3rd Nigerian Economic Zones Association conference, Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policies and Tax Reforms Committee, conveyed the intention to make significant amendments to the regulations governing investment in FTZs.
Ajayi-Kadri underscored the importance of understanding the historical context of export processing zones and free trade zones, highlighting their foundational goal of promoting manufacturing for export.
He elaborated on the approved activities within the zones, clarifying that certain activities, such as banking, must align with defined regulations.
His concerns particularly focused on tax incentives, noting that Section 8 of the proposed amendments states that only approved enterprises within a zone will enjoy tax exemptions.
He emphasized that while Section 18 allows for sales to the customs territory, it does not confer tax exemptions, a point he believes has been misinterpreted over time.
Ajayi-Kadri expressed that these discussions should be framed around the principles of fairness and competitiveness for all businesses.
He raised an important question about how existing tax exemptions for zone-based companies impact the more than 2,500 members who operate outside these zones. It’s crucial, he argued, to ensure a level playing field to enhance the competitiveness of all sectors.
He argued for the proposed tax reform bill as a positive step towards clarity and equity, stating that it advocates for taxable sales to the customs territory, thereby establishing uniform tax obligations for all sellers.
He believes this repositioning does not mark a rollback of tax incentives but rather serves to align with established laws and global best practices for FTZs.
Citing examples from other countries, he noted that Nigeria’s approach remains generous even post-amendments.
While NACCIMA has expressed concerns regarding several specific sections of the proposed bill that they feel could dismantle key incentives, this discourse presents an opportunity for constructive dialogue among stakeholders.
Moving forward, it will be essential for both organizations to engage with government policymakers collaboratively to ensure that the final outcome supports the growth of free trade zones while also addressing the concerns of all businesses.