The brand new Nigeria Tax Act permits firms working inside Free Commerce Zones (FTZs) to promote as much as 25 per cent of their output into the home market with out dropping their tax exemptions.
The Federal Inland Income Service (FIRS), which made this recognized, said that, Nigeria’s newly enacted tax legal guidelines are designed to strengthen financial competitiveness, appeal to investments and enhance long-term fiscal stability.
The company additionally clarified that the much-debated 4 per cent Growth Levy on imported items will not be a brand new or further tax burden, however a streamlined consolidation of a number of current levies.
The FIRS clarified that that the federal government was not rolling again the incentives for FTZs which have attracted export-oriented buyers for many years.
It mentioned that nevertheless, the reforms keep the tax-exempt standing of FTZ enterprises and introduce clearer tips to protect the aim of the zones.
“Below the brand new guidelines, FTZ firms can promote as much as 25 per cent of their output into the home market with out dropping tax exemptions. A 3-year transition interval has additionally been supplied to permit corporations to regulate easily.” Authorities officers say the reforms intention to curb abuses the place firms used FTZ licences to evade home taxes whereas competing throughout the Nigerian market.
With the brand new measures, Nigeria aligns with world FTZ fashions in locations just like the UAE and Malaysia, the place the zones perform primarily as export hubs for logistics, manufacturing and expertise.
The introduction of a 15 per cent minimal Efficient Tax Charge (ETR) for big multinational and home firms has additionally been met with public concern. However the FIRS famous that, this coverage aligns with a world tax settlement endorsed by over 140 international locations underneath the OECD/G20 framework.
With out this adoption, Nigeria risked dropping income to different international locations by way of the “High-Up Tax” mechanism, the place the house nation of a multinational collects the distinction when a number nation costs under 15 per cent. By localising the rule, Nigeria ensures that tax income from multinational operations stays inside its borders.
The ETR can be prolonged to giant home firms to make sure a degree enjoying subject and discourage profit-shifting practices that undermine the fiscal system.
The reforms additionally introduce sweeping modifications to capital beneficial properties taxation—now termed “chargeable beneficial properties.”
The brand new framework comprises a number of incentives to advertise funding and capital mobility.
