April 8 2021

Companies in Free Zones To Submit Income Tax Returns

Source: IBFD Tax Research Platform News

The Federal Inland Revenue Service (FIRS) requires all approved enterprises operating in free trade zones, export processing zones and oil and gas free zones to file tax returns.

According to the Finance Act 2020, all enterprises registered and operating in these zones are to file income tax returns in accordance with the provisions of the Companies Income Tax Act (CITA). However, operators in these zones still enjoy the tax-exempt status and other benefits conferred by the Nigerian Export Processing Zones Authority Act (NEPZA) and Oil and Gas Free Zone Authority Act (OGFZA), including repatriation of foreign capital at any time with capital appreciation, remittance of profits and dividends earned by foreign investors, 100% foreign ownership, etc.

The filing obligation will be for the 2021 and subsequent years of assessment while enterprises are expected to compute and pay any tax due in the manner prescribed under the CITA.

For ease of compliance, enterprises operating within various zones are expected to file their returns with the FIRS' offices situated in the geo-political regions of Nigeria where they are located. Thus, enterprises located in the South: in Port-Harcourt; enterprises operating in the South East: Enugu; in the South West: Ibadan; in the North East and North West: Kano; and in the North Central part: Abuja.

Penalties for failure to comply with the filing requirements as regards the due dates will be imposed in accordance with the provisions of the CITA and the FIRS (Establishment) Act 2007.

The FIRS communicated the above through a Public Notice issued on its website on 1 April 2021, following the Finance Act 2020 which amended relevant sections of the Nigerian Export Processing Zones Authority Act (NEPZA) and the Oil and Gas Free Zone Authority Act (OGFZA).