The Manufacturers Association of Nigeria (MAN) has expressed its support for the proposed reform of free-trade zone operations in Nigeria.
The reform, which is currently before the National Assembly, aims to bring clarity and equity to the tax treatment of companies operating within the zones.
According to Segun Ajayi-Kadir, Director General of MAN, the current tax incentives for companies operating within the zones are not consistent with the law and undermine tax-paying entities operating within the customs territory.
He noted that the tax exemption enjoyed by companies operating within the zones puts MAN’s over 2,500 members who operate outside the zone at a disadvantage, making them less competitive.
The proposed reform seeks to address this issue by stating that sales to the customs territory are taxable, not just for import duties and VAT, but also for Corporate Income Tax (CIT) purposes.
This means that all sellers in the customs territory will be subject to the same tax obligations, ensuring fair competition and protecting the country’s tax base.
Ajayi-Kadir emphasized that the reform is in line with global best practices for free zones and that Nigeria will continue to be more generous even after the proposed amendments.
He cited Ghana as an example, where only up to 30% of sales into the customs territory are allowed, subject to payment of duties and taxes, including CIT. In contrast, Nigeria allows 100% sales, with indefinite tax exemption on exports.
The proposed reform is expected to ensure equitable tax treatment for companies operating in the customs territory and those licensed to operate within the free zones.
Licensed entities will also enjoy similar incentives available to entities within the customs territory, making it a win-win outcome.
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