Senate exempts oil, gas export zone operators from tax

 The Senate on Thursday passed a bill into law the new Oil and Gas Export Free Zone Authority Act, which exempts operators in the country from paying taxes.
The bill is titled, ‘The Oil and Gas Export Free Zone Authority Act Cap 05, LFN 2011 (Amendment) Bill, 2015′.
The Senate, by the passage, has also approved that the appointment of the board chairman must reflect federal character as provided in the 1999 Constitution.
The amendments made it mandatory for the appointment of the chairman and members of the board must now be subject to Senate confirmation.
Chairman of the Joint Senate Committee on Trade and Establishment and Public Service, Senator Odion Ugbesia, said the most attractive feature of a free trade zone anywhere in the world was the tax holiday.
He said investors enjoyed tax holiday as incentives and encouragement for investment, stressing that the amendment had made provisions for that.
He said, “The objectives of this new amendment included socio-economic development of the immediate community where the free zones and sub-zones are located; contributing to the growth of the country’s Gross Domestic Product; and domestication of business activities in the oil and gas sector.
“It will create employment  and of course, the tax holiday for the operators is in line with best global practices. Nigeria should be no exemption.
“An amendment of section 8 sub section (3) (4) provides that an approved free zone enterprise or developer or operator shall be entitled to tax holiday including but not limited to Value Added Tax, and the Capital Gains Tax.
“The other feature is that the tax holiday should be enjoyed fully by the operators of oil and gas in the industry. Free zones all over the world observe tax holidays that means you don’t pay tax.
“This in self provides the opportunity for free zones to contribute to the growth of the economy. It is to encourage industrial development in the country.
“Free zones are not operating the way they should and that is why we have passed this Bill. What we have in the country today is not providing the expected result but with this Bill I think things will change and we will begin to reap the benefits of actual free zone mechanism.
“The bill is to bring the operation of free zone to international standard. With this Bill we should do business without paying tax whatsoever because that is the incentive that operators in such zones enjoy and this is to encourage them.”