The Nigeria Economic Zones Association (NEZA) has raised the alarm over potential capital flight, job losses, and reduced investor confidence following the federal government’s recent overhaul of tax regulations, particularly provisions affecting Special Economic Zones (SEZs) and Free Trade Zones (FTZs).
In a statement released Monday, NEZA acknowledged the Nigeria Tax Act and the Nigeria Tax Administration Act, 2025 as critical steps toward improved fiscal transparency and revenue assurance. However, it warned that specific elements of the legislation could undermine decades of progress in Nigeria’s investment ecosystem.
“Without careful engagement and strategic interventions, these reforms risk eroding investor confidence, jeopardising over one hundred thousand jobs, triggering capital flight to competing African countries, and increasing costs for Nigerian consumers,” NEZA stated.
Free Zones Caught in Crossfire of Tax Reform
Of particular concern are new tax provisions that strip existing tax protections for companies operating within free zones even those that export 100% of their goods.
According to NEZA, Section 57 of the Nigeria Tax Law, 2025 mandates that companies in FTZs, regardless of their export compliance, are now subject to taxation. The association warns this change undermines the foundational principles of the free zone scheme and risks making Nigerian zones “the least attractive” on the African continent.
“This has created deep uncertainty among investors, and for the first time, even companies fully aligned with the 100% export or 75% export policy are now taxable. That completely undermines the intent of the free zone regime,” the group said.
AfCFTA Undermined, Jobs on the Line
The association also pointed to a larger continental implication, noting that these tax reforms could weaken Nigeria’s position under the African Continental Free Trade Area (AfCFTA), by encouraging companies to relocate to neighbouring countries with more favourable free zone policies while still maintaining duty-free access to Nigeria’s market.
- NEZA estimates over 100,000 direct jobs are sustained by Nigeria’s free zones.
- Indirect employment and local supply chains could also be significantly disrupted.
- Nigerian consumers may face higher prices as domestic sales from zones become taxable.
“Investors may choose to relocate to other African countries with more favourable regimes while still benefiting from AfCFTA. That’s a double loss for Nigeria jobs and investment gone, but competition remains.”
Free Zones Already Contributing to Revenue
NEZA rejected the notion that free zones are revenue drains. In 2024, operators reportedly contributed over ₦100 billion in customs duties and more than ₦2 billion in PAYE taxes despite existing tax holidays.
Beyond tax, the zones have played a key role in:
- Infrastructure development
- Local supply chain growth
- Skills development and industrial capacity
The association noted that dismantling investor incentives could have long-term effects that may shrink not grow the national revenue base.
“These risks are not hypothetical. Investors are already re-evaluating Nigeria’s position as a viable base for manufacturing and exports.”
NEZA Calls for Moratorium, Dialogue with Government
The association criticised the lack of structured consultation during the development and rollout of the tax reforms. It is now calling on the presidency, the Federal Inland Revenue Service (FIRS), NEPZA, OGFZA, and other key institutions to convene an emergency dialogue with operators in the free zone ecosystem.
Among NEZA’s demands:
- An immediate moratorium on implementing the new tax rules affecting FZEs
- A comprehensive impact assessment of the new laws
- A new, balanced framework that supports revenue generation without compromising competitiveness
“Policy misalignment, if left unchecked, could derail national goals on industrialisation, job creation, and export diversification,” NEZA warned.
