The Nigeria Export Processing Zones (NEPZ) were developed to boost exports, attract foreign direct investment, and create jobs in the country. In this model, the government provides generous tax breaks to companies (mostly foreign) to attract foreign direct investment, generate employment, and boost exports. However, research conducted by PSI affiliates in Nigeria, with funding from the Friedrich Ebert Stiftung (FES) Nigeria, shows otherwise. According to the report, governments lose between $50 million and $500 million per year because of tax incentives provided to companies in export processing zones.
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Corporation in these zones offer the worst forms of working conditions and do not allow workers to be organized or join any trade union of their choice. According to the provisions of the Nigeria Export Processing Zones Act, the regulatory framework for the implementation of this economic model, legislative provisions on taxes, levies, duties, and foreign exchange regulations shall not apply within the Zones; companies have the right to the repatriation of foreign capital investment in the Zones at any time with capital appreciation of the investment; and at any time, the companies can remit profits and dividends earned by foreign investors in the Zones without recourse to any national tax laws.
Labour Unions and Civil Society Organizations are asking the government to reform this Act to reduce the amount of revenue loses because of the ridiculous tax incentives granted to these corporations.
Speaking, comrade Sani Baba, the Regional Secretary of Public Services International (PSI) opined that,
“For a country seeking ways to mobilise internal finance necessary for shoring up spending in social services provisions such as education, potable water, sanitation and hygiene support and healthcare, it ought to be seeking imaginative, timely and effective ways to cut these abuses”.
The organised labour called on the government to consciously look inward to reduce and ultimately eliminate tax incentive abuses as against the mind-blowing penchant for internal and external borrowing.
Lending his voice, Comrade Peters Adeyemi, Vice President of PSI noted that,
“These are funds that ought to improve the payment of wages and living conditions of workers, build public schools and supply adequate teaching staff and materials to public schools, provide the required conditions to reinforce girl-child education, improve health services and delivery, develop a sustainable infrastructure and energy sector, and a strong domestic production sector”.
He concluded by affirming these reforms that they are calling for can generate billions of Naira to address the debt crises in Nigeria.
Labour Unions and Civil Society Organizations are asking the government to reform this Act to reduce the amount of revenue loses because of the ridiculous tax incentives granted to these corporations. Tax and development experts have described these abusive tax exemptions and incentives as contraventions to the mandate of the Federal Inland Revenue Service to generate funds domestically to fund national development. It is, therefore, necessary and urgent to commence reform to, aside from sourcing internal resource mobilization possibilities, also increase transparency and accountability of the operations of the corporations in these zones, including the participation of labour unions in these zones. The unions and CSOs have committed to lend their voices and support to the necessary reform processes.