The Federal Inland Revenue Service (“FIRS”)has issued a public notice to all approved enterprises operating within Nigeria’s Export Processing and Oil & Gas Free Zones to file income tax returns for 2021 and subsequent years of assessment; and compute income tax and pay the tax due.
The returns are required to be filed in the manner and time specified in the Companies Income Tax Act (“CITA”).
Enterprises operating in the South-South region are to file returns with the Port Harcourt, Medium Tax Office (“MTO”), enterprises operating in the South-East region are to file returns with the Enugu, MTO, while enterprises operating in the South-West region are to file returns with the Ibadan, MTO.
Enterprises operating in the North-East and North-West regions are to file returns with the Kano, MTO, while enterprises operating in the North-Central region and the Federal Capital Territory, Abuja are to file returns with the Abuja MTO.
Enterprises operating in Lagos State are to file returns with the Lagos Island, MTO.
Analysts at Proshare Group explained that Free Zones designated by order of the President, upon the recommendation of the Nigeria Export Processing Zones Authority (“NEPZA”), pursuant to the provisions of the NEPZA Act, and those so designated by the President, and operating in the Oil and Gas Export Free Zones, and subject to the supervision and control of the Oil and Gas Export Free Zone Authority (“OGEFZA”), enjoy several tax and other related incentives.
For example, pursuant to section 8 of the OGEFZA Act and paragraph 5(1) of the Oil and Gas Export Free Zone Regulations 2019 (the “OGEFZA Regulations”), approved enterprises operating within Free Zones in the oil and gas industry are exempt from all federal, state, and local government taxes, levies, rates, and duties in connection with operations carried on within such Free Zones.
“In our view, the Notice is an administrative instrument by which the FIRS seeks to give life to the new tax obligation now imposed on Free Zone enterprises. Further, we note that the amendments to the OGEFZA Act and the NEPZA Act under the Finance Act, have now aligned Free Zones with section 55(1) of the CITA; which already covers every company, including a company granted exemption from incorporation, whether or not a company is liable to pay tax under the Act”, said Proshare.