Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation

Samson Faithful Obiora

doi:doi:10.11648/j.ijls.20250804.16

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Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation

Samson Faithful Obiora^*

Published in International Journal of Law and Society (Volume 8, Issue 4)

Received: 5 October 2025 Accepted: 3 November 2025 Published: 9 December 2025

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Abstract

This paper examines the operations of Free Trade Zones in Nigeria, adopting the doctrinal legal research methodology. It explores amongst others, the regulatory framework provided under the Nigeria Export Processing Zones Authority Act, 1992, the Nigeria Export Processing Zones Authority Order, 2002 and the Investment Procedures, Regulations, and Operational Guidelines for Free Zones in Nigeria, 2004. The paper also critiques the operations of free trade zones in Nigeria against the backdrop of the proposed National Tax Bill, 2024. As this paper will reveal, the proposed regime under the National Tax Bill marks a paradigm shift from the tax-exempt incentive granted under the extant legal framework to a graduated tax system. This proposed tax regime is structured into three (3) tiers – full exemption, partial exemption, and no exemption – determined by the level of export performance of entities operating within the zones. The findings expose several gaps in the proposed tax regime, including the risk of tax avoidance by offshore or related entities, the absence of a defined methodology for determining proportional tax in cases of partial exemption, increased administrative burden and a disproportionate penalty system arising from the trifurcated tax structure, amongst concerns. This paper, in reflecting on these statutory gaps, concludes by emphasizing the need for a cautious approach, thorough impact assessment, and adequate stakeholder consultation.

Published in	International Journal of Law and Society (Volume 8, Issue 4)
DOI	10.11648/j.ijls.20250804.16
Page(s)	328-336
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2025. Published by Science Publishing Group

Keywords

Free Trade Zones, NEPZA, Tax, Nigeria, Nigerian Tax Bill

References

[1]	Japhet E., Moyinoluwa A., Ayomide A, “Beyond Borders: Are Free Zones Really Catalyst for Foreign Direct Investment?” Available from: https://gel.mltechnology.co.uk/images/Newsletter/Beyond_Borders_-_Are_Free_Zones_Really_Catalysts_For_Foreign_Direct_Investment.pdf (accessed 22 February 2025).
[2]	Vincent C., Persuad B. Developing with Foreign Investment. London: Croom Helm; 1987.
[3]	Hans S. The Legal Implications of the Establishment of Free Trade Zones in South Africa. Comparative and International Law Journal of Southern Africa. 1998, 31(1), 1-17. https://doi.org/10.10520/AJA00104051_314
[4]	Quoted from Mark B. Jurisdictional Uncertainty: The American Foreign Trade Zone. North Carolina Journal of International Law. 1993, 8(3), 240.
[5]	Ahmed A. The Structural Adjustment Program: The Journey so Far. Economic and Financial Review. 1987, 25(4), 25-28.
[6]	Adepoju B. Free Trade Zones Between Theory and Practice in Nigeria. IOSR-JHSS. 2019, 24(9), 52-68.
[7]	Umar G. The Implementation of Free Trade Zone Policy in Nigeria. (MSc thesis, Nasarawa State University 2016). Available from: https://keffi.nsuk.edu.ng/server/api/core/bitstreams/2f1e5d06-4519-479a-8687-909763288d40/content (accessed 21 February 2025).
[8]	NEPZA, “Free Zones Performance”. Available from: https://nepza.gov.ng/free-zones/ free-zones-performance/ (accessed 21 February 2025).
[9]	NEPZA. “The Free Zones”. Available from: https://nepza.gov.ng/free-zones/ (accessed 30 March 2025).
[10]	For the full lists of established and operational free zones in Nigeria – See NEPZA, “Operational Zones”. Available from: https://nepza.gov.ng/free-zones/operational-zones/ (accessed 23 February 2025).
[11]	NEPZA, “Inoperative Zones”. Available from: https://nepza.gov.ng/free-zones/inoperative-zones/ (accessed 23 February 2025).
[12]	NEPZA, “Performance Indicators”. Available from: https://nepza.gov.ng/free-zones/free-zones-performance/ (accessed 24 February 2025).
[13]	FIRS, “Public Notice to Approved Enterprises”. Available from: https://firs.gov.ng/public-notice-to-approved-enterprises.pdf (accessed 24 February 2025).
[14]	Obiora S. F. Collective Bargaining Trends in Nigeria: Living up to the International Labour Organisation (ILO) Standards. Cambridge Law Review. 2022, 7(1), 121.
[15]	Organisation for Economic Co-operation and Development, Model Tax Convention on Income and on Capital 2017 (Full Version). France: OECD Publishing; 2019, arts. 5 and 6 at pp. M19-26.
[16]	Oyeyemi O., Assumpta N, “Nigeria Tax Bill 2024: Will Free Zones Remain Free?”. Available from: https://ao2law.com/wp-content/uploads/2024/11/Nigeria-Tax-Bill-2024-and-its-Impact-on-Free-Zones-1.pdf (accessed 26 February 2025).
[17]	See also Pierre B., Anne B., Roel D., Camille S. Effective Tax Rates, Firm Size and the Global Minimum Tax. Washington, D. C: World Bank Group; 2024, pp. 1-74.
[18]	See FIRS, “Nigeria did not Endorse the OECD Minimum Corporate Tax Agreement in the Country’s Best Interest (Public Notice, May 23, 2022)”. Available from: https://firs.gov.ng/public-notice-nigeria-does-not-endorse-the-oecd-tax-agreement.pdf (accessed 25 February 2025).
[19]	KPMG, “Minister of Finance Issues Order on Significant Economic Presence by Non-Nigerian Companies”. Available from: https://assets.kpmg.com/content/dam/kpmg/ng/pdf/tax/kpmg-in-nigeria-fgn-issues-cit-(significant-economic-presence)-order-2020.pdf last (accessed February 25, 2025).
[20]	FIRS, “Outcome Statement from the OECD-Nigeria Two-Day Workshop on Maximizing the Benefits of the Two Pillar Solution for Nigeria.” Available from: https://x.com/FIRSNigeria/status/1646500395378778117 last (accessed on 11 February 2025).

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APA Style

Obiora, S. F. (2025). Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation. International Journal of Law and Society, 8(4), 328-336. https://doi.org/10.11648/j.ijls.20250804.16

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ACS Style

Obiora, S. F. Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation. Int. J. Law Soc. 2025, 8(4), 328-336. doi: 10.11648/j.ijls.20250804.16

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AMA Style

Obiora SF. Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation. Int J Law Soc. 2025;8(4):328-336. doi: 10.11648/j.ijls.20250804.16

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@article{10.11648/j.ijls.20250804.16,
  author = {Samson Faithful Obiora},
  title = {Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation},
  journal = {International Journal of Law and Society},
  volume = {8},
  number = {4},
  pages = {328-336},
  doi = {10.11648/j.ijls.20250804.16},
  url = {https://doi.org/10.11648/j.ijls.20250804.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijls.20250804.16},
  abstract = {This paper examines the operations of Free Trade Zones in Nigeria, adopting the doctrinal legal research methodology. It explores amongst others, the regulatory framework provided under the Nigeria Export Processing Zones Authority Act, 1992, the Nigeria Export Processing Zones Authority Order, 2002 and the Investment Procedures, Regulations, and Operational Guidelines for Free Zones in Nigeria, 2004. The paper also critiques the operations of free trade zones in Nigeria against the backdrop of the proposed National Tax Bill, 2024. As this paper will reveal, the proposed regime under the National Tax Bill marks a paradigm shift from the tax-exempt incentive granted under the extant legal framework to a graduated tax system. This proposed tax regime is structured into three (3) tiers – full exemption, partial exemption, and no exemption – determined by the level of export performance of entities operating within the zones. The findings expose several gaps in the proposed tax regime, including the risk of tax avoidance by offshore or related entities, the absence of a defined methodology for determining proportional tax in cases of partial exemption, increased administrative burden and a disproportionate penalty system arising from the trifurcated tax structure, amongst concerns. This paper, in reflecting on these statutory gaps, concludes by emphasizing the need for a cautious approach, thorough impact assessment, and adequate stakeholder consultation.},
 year = {2025}
}

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TY  - JOUR
T1  - Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation
AU  - Samson Faithful Obiora
Y1  - 2025/12/09
PY  - 2025
N1  - https://doi.org/10.11648/j.ijls.20250804.16
DO  - 10.11648/j.ijls.20250804.16
T2  - International Journal of Law and Society
JF  - International Journal of Law and Society
JO  - International Journal of Law and Society
SP  - 328
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PB  - Science Publishing Group
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UR  - https://doi.org/10.11648/j.ijls.20250804.16
AB  - This paper examines the operations of Free Trade Zones in Nigeria, adopting the doctrinal legal research methodology. It explores amongst others, the regulatory framework provided under the Nigeria Export Processing Zones Authority Act, 1992, the Nigeria Export Processing Zones Authority Order, 2002 and the Investment Procedures, Regulations, and Operational Guidelines for Free Zones in Nigeria, 2004. The paper also critiques the operations of free trade zones in Nigeria against the backdrop of the proposed National Tax Bill, 2024. As this paper will reveal, the proposed regime under the National Tax Bill marks a paradigm shift from the tax-exempt incentive granted under the extant legal framework to a graduated tax system. This proposed tax regime is structured into three (3) tiers – full exemption, partial exemption, and no exemption – determined by the level of export performance of entities operating within the zones. The findings expose several gaps in the proposed tax regime, including the risk of tax avoidance by offshore or related entities, the absence of a defined methodology for determining proportional tax in cases of partial exemption, increased administrative burden and a disproportionate penalty system arising from the trifurcated tax structure, amongst concerns. This paper, in reflecting on these statutory gaps, concludes by emphasizing the need for a cautious approach, thorough impact assessment, and adequate stakeholder consultation.
VL  - 8
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Author Information

Samson Faithful Obiora

Faculty of Law, University of Lagos, Lagos, Nigeria

Contact Email

http://orcid.org/0009-0008-0903-8351

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APA Style

Obiora, S. F. (2025). Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation. International Journal of Law and Society, 8(4), 328-336. https://doi.org/10.11648/j.ijls.20250804.16

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ACS Style

Obiora, S. F. Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation. Int. J. Law Soc. 2025, 8(4), 328-336. doi: 10.11648/j.ijls.20250804.16

Copy | Download

AMA Style

Obiora SF. Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation. Int J Law Soc. 2025;8(4):328-336. doi: 10.11648/j.ijls.20250804.16

Copy | Download

@article{10.11648/j.ijls.20250804.16,
  author = {Samson Faithful Obiora},
  title = {Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation},
  journal = {International Journal of Law and Society},
  volume = {8},
  number = {4},
  pages = {328-336},
  doi = {10.11648/j.ijls.20250804.16},
  url = {https://doi.org/10.11648/j.ijls.20250804.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijls.20250804.16},
  abstract = {This paper examines the operations of Free Trade Zones in Nigeria, adopting the doctrinal legal research methodology. It explores amongst others, the regulatory framework provided under the Nigeria Export Processing Zones Authority Act, 1992, the Nigeria Export Processing Zones Authority Order, 2002 and the Investment Procedures, Regulations, and Operational Guidelines for Free Zones in Nigeria, 2004. The paper also critiques the operations of free trade zones in Nigeria against the backdrop of the proposed National Tax Bill, 2024. As this paper will reveal, the proposed regime under the National Tax Bill marks a paradigm shift from the tax-exempt incentive granted under the extant legal framework to a graduated tax system. This proposed tax regime is structured into three (3) tiers – full exemption, partial exemption, and no exemption – determined by the level of export performance of entities operating within the zones. The findings expose several gaps in the proposed tax regime, including the risk of tax avoidance by offshore or related entities, the absence of a defined methodology for determining proportional tax in cases of partial exemption, increased administrative burden and a disproportionate penalty system arising from the trifurcated tax structure, amongst concerns. This paper, in reflecting on these statutory gaps, concludes by emphasizing the need for a cautious approach, thorough impact assessment, and adequate stakeholder consultation.},
 year = {2025}
}

Copy | Download

TY  - JOUR
T1  - Legal Framework of Free Trade Zones in Nigeria: A Shift Towards Taxation
AU  - Samson Faithful Obiora
Y1  - 2025/12/09
PY  - 2025
N1  - https://doi.org/10.11648/j.ijls.20250804.16
DO  - 10.11648/j.ijls.20250804.16
T2  - International Journal of Law and Society
JF  - International Journal of Law and Society
JO  - International Journal of Law and Society
SP  - 328
EP  - 336
PB  - Science Publishing Group
SN  - 2640-1908
UR  - https://doi.org/10.11648/j.ijls.20250804.16
AB  - This paper examines the operations of Free Trade Zones in Nigeria, adopting the doctrinal legal research methodology. It explores amongst others, the regulatory framework provided under the Nigeria Export Processing Zones Authority Act, 1992, the Nigeria Export Processing Zones Authority Order, 2002 and the Investment Procedures, Regulations, and Operational Guidelines for Free Zones in Nigeria, 2004. The paper also critiques the operations of free trade zones in Nigeria against the backdrop of the proposed National Tax Bill, 2024. As this paper will reveal, the proposed regime under the National Tax Bill marks a paradigm shift from the tax-exempt incentive granted under the extant legal framework to a graduated tax system. This proposed tax regime is structured into three (3) tiers – full exemption, partial exemption, and no exemption – determined by the level of export performance of entities operating within the zones. The findings expose several gaps in the proposed tax regime, including the risk of tax avoidance by offshore or related entities, the absence of a defined methodology for determining proportional tax in cases of partial exemption, increased administrative burden and a disproportionate penalty system arising from the trifurcated tax structure, amongst concerns. This paper, in reflecting on these statutory gaps, concludes by emphasizing the need for a cautious approach, thorough impact assessment, and adequate stakeholder consultation.
VL  - 8
IS  - 4
ER  -

Copy | Download