• 20 Marks

AT – Nov 2014 – L3 – SB – Q2 – Tax Incentives and Reliefs

Prepare a presentation discussing objectives of tax incentives and benefits in Export Processing Zones for German investors.

Your firm has been commissioned by the Nigerian Business Forum to present a thirty-minute paper at a seminar organised for some German Investors who wish to establish in certain sectors of the Nigerian Economy.

The Nigerian Business Forum made your task very easy by narrowing down your submissions to the available tax incentives which may be enjoyed by business establishments within Nigeria.

Based on the discussions between the Managing Partner and the Chairman of the Nigerian Business Forum, the following areas which should serve as guide for your presentation were highlighted:

  1. Objectives of Tax Incentives
  2. Available Tax Incentives in the Export Processing Zones in Nigeria

The Managing Partner is currently on six weeks annual leave abroad and has asked you to review the above using the guidelines provided.

You are well trained to use Power Point Microsoft Application to present this kind of report to the select group. This means that the presentation must be outlined in clear terms because of the limited time available.

You are required to prepare your presentation to cover:
a. Introduction (2 Marks)
b. Objectives of Tax Incentives (4 Marks)
c. Tax Incentives for companies operating within the Export Processing Zone (14 Marks)

(Total 20 Marks)

a. Introduction (2 Marks):

Tax incentives are statutory benefits offered by the government to attract investments, boost economic activities, and support industrial growth. They aim to create a competitive environment for businesses, enabling foreign and local enterprises to thrive.

b. Objectives of Tax Incentives (4 Marks):

  1. To attract foreign direct investment (FDI):
    • Encourages international investors to establish businesses in Nigeria.
  2. To promote economic growth:
    • Stimulates industrial development and infrastructure growth.
  3. To enhance employment opportunities:
    • Supports job creation and skill acquisition for local citizens.
  4. To encourage exports:
    • Increases foreign exchange earnings by incentivising export activities.
  5. To support regional development:
    • Reduces developmental disparity by encouraging investments in less-developed regions.

c. Tax Incentives for Companies Operating in Export Processing Zones (14 Marks):

  1. 100% Tax Holiday:
    • Complete exemption from all forms of taxation, including corporate income tax, VAT, and withholding tax.
  2. Import and Export Duty Exemptions:
    • No duties are levied on raw materials imported into the zone or finished goods exported.
  3. Repatriation of Profits:
    • Full freedom to repatriate profits and capital investments without restrictions.
  4. Exemption from Import Licensing Requirements:
    • Simplifies import procedures for machinery, equipment, and raw materials.
  5. Legal Protection for Investments:
    • Provides assurance against government expropriation or nationalisation of businesses.
  6. Currency Flexibility:
    • Allows companies to conduct transactions in foreign currencies without limitations.
  7. Streamlined Approvals and Licensing:
    • Offers fast-tracked approvals for business registrations and operational permits.
  8. Access to Government-Supported Infrastructure:
    • Includes transport networks, utilities, and pre-built facilities to reduce operational costs.
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