THE Manufacturers’ Association of Nigeria (MAN) has said the planned reform bills of Free-Trade Zones operations, in Nigeria, presently before the National Assembly, would seek clarifications to the existing tax laws in the area,and address the confusion created by such laws, in tune with global best practices.
The association took the position in a statement issued by its Director General, Segun Ajayi-Kadir, on Tuesday.
It noted that Section 8 of the NEPZA (Nigeria Export Processing Zones Authority) Act on exemption from taxes, only applies to approved enterprises operating within a Zone; and not to sales of goods and services to the customs territory, despite such trade being permitted in Section 18 of the Act.
The association argued that the concern of its over 2,500 members had been the non-level playing field the situation had created, since sales of goods, even outside the free trade Zone, to customs territory.had continued to enjoy tax waivers, to the disadvantage of manufacturers not operating within the zone.
“In specific terms, Section 8 on exemption from taxes only applies to approved enterprises operating within a Zone. They are exempted from all Federal, State and Local Government taxes, levies and rates. Sales to the customs territory is neither an approved activity nor is it within the zone.
“However, section 18 permits the sale of goods and services to the customs territory, but this does not confer tax exemption on the sales, but rather a regulatory matter regarding what is permissible,” it argued.
The association noted that the provisions of sections 8 and 18 have been misinterpreted, as not only permitting the sale into the customs territory, but also as tax exemption.
Describing such position as inconsistent with the law, the association described such act as undermining tax-paying entities, operating within the customs territory and producing similar goods and services.
“Where does the tax exemption enjoyed by the companies operating within the zones, leave my more than 2,500 members who operate outside the zone, in terms of level playing field, competitiveness, fairness and equity? They find themselves in a disadvantage position and are rendered less competitive,” it argued.
MAN, therefore, expressed the belief that the tax reform bill, before the National Assembly, has become imperative, since it would bring clarity and equity by stating that sales to the customs territory are taxable, not just for import duties and VAT, but also CIT purposes, indicating that all sellers in the customs territory should be subject to the same tax obligations.
The association, therefore, argued that rather than a reversal of such incentives, the reforms would actually bring clarification to align with the intent and letters of the enabling laws.
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