The Federal Inland Revenue Service (FIRS) and the Nigerian Export Processing Zones Authority (NEPZA) have differred over a provision of the new Finance Bill which seeks to subject companies in Free Trade Zones (FTZs) to render returns to FIRS.
It is supposed to be in line with the provisions of the Companies Income Tax (CIT) Act.
The Finance Bill seeks to amend NEPZA Act to prove that “all companies registered and operating in the Zone shall comply with the provisions of Section 55 (1) of the Companies Income Tax Act and render returns in the manner prescribed therein, to the Federal Inland Revenue Service and the penalties prescribed in Section and all penalties in the Companies Income Tax Act and the Federal Inland Revenue Establishment Act that may apply in the event of non-compliance with the said Section 55 (1) of the Companies Income Tax Act shall apply to such companies in the event of default to comply.”
The Managing Director of NEPZA, Professor Adesoji Adesugba, told Daily Trust that if the new provision is allowed to be passed as it is, that means no more tax free status for the companies FTZs, which is the essence of the free zone scheme.
“The point is we are already on top of tax filing. None compliance should be left to the authorities to deal with which is already being done. This is a surreptitious way to start policing the free zone enterprises and there will be no end to it. What of the one stop nature of the free zone concept? Eroded,” he said.
Adesugba said there are over 5000 successful free zones worldwide with China accounting for over 1500 being reason China is leading the world in industrialization.
However, the Executive Chairman, FIRS, Muhammad Nami, said FIRS is not seeking to regulate companies within the free trade zones but to make sure they operate within their terms of operations.
Responding to Daily Trust request, he said: “The FIRS is not seeking to regulate companies in free trade zones. The FIRS is also not against the tax-free status of these companies provided the conditions are met.”
Nami said the basic condition is that goods produced by the relevant companies are not sold into the customs area but exported to other countries.
“In the case of companies in the Nigerian free-trade zones, the fact is that they sell all their products into the customs area. By entering the customs area to trade, they have voluntarily put themselves under the tax regime existing there,” he said.
The FIRS boss said when tax-free companies move into the customs area, they make it difficult for companies in the customs area to operate. These companies pay duties and taxes; as such, they are not able to compete on issue of cost.
The Special Adviser, Media and Communication to the Minister of Finance, Budget and National Planning, Mr. Yunusa Tanko, said the Finance Bill is still a proposal.
He said concerns on the matter should be directed to the public hearing at the National Assembly.
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