NEZA warns Tax Reforms could jeopardise 100,000 jobs in Nigeria’s Free Zones

The Nigeria Economic Zones Association (NEZA) has welcomed the enactment of the Nigeria Tax Act, 2025, and the Nigeria Tax Administration Act, 2025, recognising the reforms as a significant step toward improving fiscal transparency and revenue assurance.

However, the association expressed concerns over provisions affecting Special Economic Zones (SEZs) and Free Trade Zones (FTZs), warning that these could undermine Nigeria’s investment climate and jeopardise over 100,000 jobs.

NEZA highlighted that the new tax rules create uncertainty for investors, including companies exporting 100% of their products from free zones, who may now be subject to taxation.

“Without careful engagement and strategic interventions, these reforms risk eroding investor confidence, triggering capital flight, and increasing costs for Nigerian consumers,” the association stated.

The association stressed that free zones already contribute significantly to the Nigerian economy, paying millions in operating licences, container examination charges, and taxes while supporting infrastructure development, local supply chains, skills training, and employment.

NEZA noted that comparable zones in Africa, such as Morocco’s Tanger Med Free Zone, demonstrate the importance of policy stability in attracting private investment and boosting exports.

NEZA also addressed concerns raised by the Manufacturers Association of Nigeria, emphasising that free zones are meant to complement, not compete with, domestic manufacturing.

The association called for a structured and inclusive dialogue between government stakeholders, including the Presidency, Federal Inland Revenue Service, NEPZA, and OGFZA and zone operators to design transitional measures that preserve investor confidence while ensuring revenue collection.

The group urged the government to consider a moratorium or phased implementation of the new tax provisions for free zone enterprises.

NEZA concluded that policy clarity, engagement, and stability are critical to ensuring that Nigeria’s free zones continue to drive industrialisation, exports, and economic competitiveness, particularly within the African Continental Free Trade Area (AfCFTA) framework.

NEZA further stressed that weakening the free zone framework could see investors relocating to other African countries such as Ethiopia, Kenya, and Ghana, which are actively strengthening their SEZ regimes with incentives, duty-free imports, and simplified customs processes.

This, the association said, could inadvertently reduce Nigeria’s competitiveness in the region and deny local businesses the benefits of foreign investment.

The association also highlighted the long-term implications for industrialisation and job creation.

“If free zones collapse or investors shift operations abroad, the government risks shrinking its overall revenue base, undermining employment, and stalling critical infrastructure projects funded through private investments,” NEZA noted.

NEZA reaffirmed its commitment to supporting both government objectives and investor interests, urging policymakers to adopt a balanced, evidence-driven approach.