NEPZA Proposes 10-year Tax Relief for Investors in Special Economic Zones

·       MAN seeks audit of FTZs, calls for special task force to sanitise operations

·       Adewoye: operators exploit loopholes, import finished or semi-finished goods under the guise of raw materials, sell at unfairly low prices

James Emejo in Abuja

The Managing Director/Chief Executive, Nigeria Export Processing Zones Authority (NEPZA), Dr. Olufemi Ogunyemi, has called for a 10-year tax relief for operators of the Special Economic Zones (SEZs).

He said investors should be exempted from the country’s new tax regime for at least 10 years to give them time to adjust their operations to the new regulations.

He spoke at a virtual stakeholder dialogue hosted by the Federal Ministry of Industry, Trade and Investment in Abuja.

However, Ogunjimi’s appeal came as the Basic Metals, Iron and Steel Manufacturers Group of the Manufacturers Association of Nigeria (MAN) also called for a comprehensive audit of all Free Trade Zones (FTZs) operations in the country, especially in the metals and steel segment.

Chairman of the Group, Prince Lekan Adewoye, also called for the recovery of lost government revenue in the past 10 years as well as prosecution of offenders engaged in under-invoicing or diversion of imports among others.

Adewoye, raised the alarm in Abuja, asserting that the sector remained the backbone of industrial development.

He said these operators exploit loopholes in the FTZ process to import finished or semi-finished goods under the guise of raw materials, selling them locally at unfairly low prices and undermining genuine local manufacturers.

Nonetheless, Ogunyemi said the advocacy for tax relief became expedient following the continued reverberation of the operators’ concerns across various local and global platforms, noting that such campaigns were deleterious to attracting Foreign Direct Investment (FDI) through the scheme.

He said the proposed tax relief, if granted, would provide stability, predictability, and seamless backward linkages with the local business environment, adding that the reprieves constituted the nucleus of the scheme.

Represented by Director, Corporate Service, NEPZA, Mrs. Haleema Sani Kamba, Ogunjimi further explained that the country would strike the right balance between revenue collection and the promised incentives for the scheme if at least a 10-year “sunset period” of tax relief was granted.

In a statement by Head, Corporate Communications, NEPZA, Dr. Martins Odeh, he appealed to the “Chairman of the Federal Inland Revenue Service, requesting a sunset period of approximately 10 years for all our investors. We hope the Chairman will consider this for the benefit of the scheme”.

Ogunjimi said the authority had continually aligned with the Renewed Hope agenda of this administration to drive growth and efficiency within the Free Trade Zone ecosystem, noting that the scheme was pivotal to the country’s realizing sustainable economic growth and industrialisation.

He said, “Our 63 Free Trade Zones and the over 700 Enterprises operating within those business enclaves will continue to serve as the cornerstone of Nigeria’s industrial and export strategy. The revenues the scheme could generate if left to operate under the global tax template, offering a potpourri of incentives as key sweeteners to attract and retain investors for sustainable operations.

“Nigeria is open for business, and NEPZA will continue to stand with FIRS and other relevant stakeholders through this transition, ensuring stability, competitiveness, and sustained investor confidence.”

The NEPZA boss, however, emphasised the need for clarity and certainty within the tax system as investors prepare their 2026 business plans, while describing the forum as the government’s commitment to transparency and collaboration.

However, Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, stressed the critical role of the reforms to cover the National Revenue System, Special Economic Zones incentives, and updated Financial Reporting Council compliance in creating a competitive environment for trade, investment, and economic growth.

Adewoye, however, pointed to the untoward activities of some operators in FTZs to the detriment of local manufacturers in particular and the economy in general.

He called on the government to act swiftly to restore sanity in FTZ operations before local industries are driven into extinction.

He stressed that the sector had meaningfully supported the Tinubu administration’s economic diversification and industrialisation goals through import substitution and value addition, employment generation and MSME development, industrial integration, as well as local production — despite daunting challenges.

According to him, these challenges include the high cost of borrowing, high energy costs, smuggling, substandard products, inconsistent policy, and infrastructural deficits.

Adewoye further lamented that the untoward activities of some operators in the Free Trade Zones compound the various challenges faced by the sector.

He said, “While there are some genuine operators within the Free Trade Zones (FTZs), the majority have abused the system and are destroying the businesses of manufacturers operating in the customs territory and, by extension, undermining Nigeria’s economy.”

The MAN sectoral chairman said, “Many companies within our FTZs today do not export anything. Instead, they import finished or semi-finished products — often substandard ones like roofing sheets, galvanized iron, and aluminium products — then sell them directly into the customs territory in violation of the policy intent.”

He also alluded to a foreign company recently operating in the Calabar FTZ that imported about 6,000 metric tons of wire coil — a key raw material used in manufacturing nails, welded mesh, BRC, and binding wire — at a declared CIF value of just $67,000 (about $11 per metric ton), while the global market price for wire coil on the London Metal Exchange (LME) is around $500 per metric ton.

According to him, this represents flagrant under-invoicing of raw materials destined for the Calabar FTZ.

He said, “What makes it even more damaging is that FTZ operators already enjoy zero import duty on all inputs, while legitimate manufacturers in the customs territory pay as much as 25 per cent duty on the same materials — creating an unfair and unsustainable competitive imbalance.”

On what is required to assure the quality of exports from FTZs into the Nigerian Customs territory, Adewoye advocated the same regulations applied to all exports into Nigeria from countries of origin.

He called for a comprehensive audit of all FTZ operations, especially in the metals and steel segment, and recovery of lost government revenue in the past 10 years as well as prosecution of offenders engaged in under-invoicing or diversion of imports among others.