Nigeria’s free trade zones are on a three-year countdown to adapt to new tax laws designed to level the manufacturing playing field.
The government is shifting from blanket tax exemptions to taxing goods sold into Nigeria and affected companies have till 2028 to adjust. This major policy change aims to foster domestic competitiveness and redefine how businesses operate within and outside the zones.
Taiwo Oyedele, who oversees the tax reforms set to take effect next year, says the final version gives companies operating in the zone some flexibility of up to 3 years before things change.
“Companies in the zone can continue whatever they are doing till 2028…2-3 years is enough time to move things around.”
The companies have the option of restructuring or “registering within the country.”
His statements came on Monday during the PWC executive summit on Nigeria’s Tax Reform in Lagos.
The Nigeria Tax Bill 2025 seeks to introduce new tax obligations for FTZ operators by proposing a mandatory minimum tax rate and removing long-standing tax exemptions previously granted by the Nigeria Export Processing Zones Authority (NEPZA) and the Oil and Gas Free Zones Authority (OGFZA).
Oyedele explained that allowing FTZ entities to sell goods in the customs territory without taxation creates an unfair advantage over local manufacturers who are subject to tax regulations.
“All exports from the free trade zone will be tax-free, but if you sell into the customs territory, we will look into your activity, and if it falls into the priority sector or any sector you’re in, you may be granted a tax-free period of ten years,” Oyedele said.
He explained that there are no existing laws—whether the NEPZA Act, the Oil and Gas Free Zone Act, or any other statute—that permit FTZs to sell goods within the customs territory without taxation.
Oyedele said that there needs to be a repeal of the law setting up the free trade zone. “We are looking to re-enact new ones under Special Economic Zone free status.”
“Economic priority sector is the replacement we were able to find for the freezone in terms of activities within the customs territory.”
Nigerian authorities are working to attract Nigerian “unicorn” companies, currently based in Silicon Valley, back to Nigeria. They recognize that Nigeria needs to offer competitive advantages, similar to those these companies enjoy in the US, to draw them home.
“ We are trying to move them back to Nigeria. and conversations with them revealed that even if they were to be headquartered here, the country is the most competitive in attracting capital in that form.”
Oyedele said the government is looking to allow companies to have the same advantage in Nigeria if they were to leave their companies in the US.
Seun Adu, a tax and transfer pricing partner at PwC Nigeria, clarified that the new tax reforms aim to provide tax incentives within free zones specifically for businesses that primarily export their manufactured goods. This strategy is intended to strategically influence business operations and supply chains by rewarding export-focused activities. (BusinessDay)
