Oyedele Justifies Tax Reforms for Free Trade Zones
By Godsgift OnyedinefuFebruary 27, 2025
Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reform Committee, has defended the proposed tax reforms for Nigeria’s Free Trade Zones (FTZs), stating that they are essential for ensuring fair competition between FTZ operators and manufacturers operating within the customs territory.
Speaking during a public hearing on the tax reform bills at the House of Representatives, Oyedele addressed concerns raised by the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) and other stakeholders who argue that FTZs should remain tax-exempt.
The Nigeria Tax Bill 2024 proposes new tax obligations for FTZ operators, introducing a mandatory minimum tax rate and removing long-standing tax exemptions previously granted under 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.
“If a free zone entity can sell to the customs territory, competing with people who are paying taxes and not paying taxes, that’s the best way to create economic distortion, and that is not the intention,” he said.
He further clarified that no existing law—whether the NEPZA Act, the Oil and Gas Free Zone Act, or any other statute—permits FTZs to sell goods within the customs territory without taxation.
Citing legal provisions, Oyedele referenced Section 8 of the NEPZA Act and Section 8 of the Oil and Gas Free Zone Act, which state:
“Approved enterprises operating within a zone shall be exempt from all federal, state, and local government taxes, levies, and rates.”
“So the operating word is ‘within the zone,’” he emphasized.
Oyedele also highlighted how other African nations structure their FTZ tax policies, noting that Ghana grants tax exemptions for only 10 years, after which businesses pay up to 8% in taxes. Similarly, Benin Republic allows businesses to operate tax-free for 15 years, after which they are required to pay up to 15% in taxes.
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