INTRODUCTION
Two statutes enacted in 2025 created, without apparent design, a tension that goes to the heart of Nigeria’s fiscal treatment of free trade zone enterprises (FZEs). The Investments and Securities Act, 2025 (ISA), enacted in March 2025, opened the public capital market to FZEs for the first time. Its enabling proviso, however, conditions that access to the FZEs becoming subject to relevant tax laws and regulations in Nigeria. The Nigeria Tax Act, 2025 (NTA), enacted subsequently in June 2025, restructured the entire framework of FZE taxation, amending both the Nigeria Export Processing Zones Act (NEPZ Act) and the Oil and Gas Export Free Trade Zone Act (OGEFZ Act), and replacing their blanket exemption provisions with a nuanced, conditional, and time-bounded regime under the NTA’s Second Schedule.
This article examines a deceptively straightforward question: what did Section 95(1)(f) of the ISA mean when it was enacted, and what does it mean now, read alongside and against the NTA? Specifically, does the proviso operate as a mechanism for stripping an FZE of its tax exemptions upon entry into the public market, or does it do something far more modest, confirm that FZEs, like all market participants, remain subject to Nigeria’s tax laws?
The ISA Proviso: Legislative Intent at Enactment
Section 95(1) of the ISA identifies the categories of persons entitled to invite the public to acquire or dispose of their securities. Paragraph (f) extends this right to FZEs, subject to the prior approval of the Securities and Exchange Commission (SEC) and such entity becoming subject to relevant tax laws and regulations in Nigeria.
At the time of enactment, the tax position of FZEs was largely governed by the NEPZ Act and the OGEFZ Act, both as moderately amended by the Finance Acts of 2020 to 2022. Section 8 of both statutes conferred broad fiscal incentives on approved enterprises, exempting them from federal taxes, levies, rates, and duties. This position was reinforced by Section 18(1)(a) of each Act, which preserved those incentives against subsequent legislative derogation except by express provision(s).
Against that backdrop, the proviso in Section 95(1)(f) of the ISA may have been read to mean that an FZE seeking access to the capital markets would submit to the general tax regime; leaving FZEs with the choice of either retaining their fiscal exemptions within the Free Trade Zones (FTZs) and jettisoning the Nigeria capital markets; or access public investment and denounce their broad tax exemptions.
This interpretation indeed left more to be desired as it went against the grain of established principles of statutory interpretation; on of such rules will not allow Section 95(1)(f) of the ISA to be construed to override the specific fiscal regime established under NEPZ Act and OGEFZ Act, that is, without the ISA expressly stating so in more elaborate words.
The NTA: A Restructured Framework and Its Effect on the ISA Proviso
The enactment of the NTA later in 2025 changed the legislative landscape materially. Two of the NTA’s amendments are of particular relevance here: First, Section 196(2) of the NTA amends the NEPZ Act by deleting Sections 8 and 18(1)(a). Section 196(3) makes the equivalent amendment to the OGEFZ Act.
The comprehensive blanket exemptions that previously resided in those two statutes, and which formed the near fiscal-neutral foundations of FZEs was deleted. They have not been repealed without replacement; they have been consolidated and restated in the NTA’s own Second Schedule. With their removal from the NEPZ Act and OGEFZ Act, the NTA is now the sole governing instrument for FZEs taxation in Nigeria.
The NTA’s Second Schedule establishes a detailed, conditional framework for FZE taxation that differs meaningfully from the predecessor regime. Section 60 of the NTA provides that where a trade or business is carried on by a FZE in an export processing or free trade zone, the Second Schedule governs. The Schedule operates as follows, it:
1. preserves a full tax exemption for NEPZ’s FZEs whose sales arise wholly or predominantly from export activity; specifically, where not more than 25% of sales arise from transactions with the Nigeria customs territory;
2. introduces a proportionate income tax charge: where customs territory sales exceed the 25% threshold, tax accrues on the profits attributable to those customs’ territory sales;
3. introduces a prospective sunset with effect from 1 January 2028; the profits of a NEPZ FZE from all sales to the customs territory will be liable to income tax, save the President excercises a maximum 10year deferrment; and
4. provides that, notwithstanding anything in the Schedule or any other law, every FZE must comply with the relevant provisions of the Nigeria Tax Administration Act (NTAA), including registration, filing of tax returns, and deduction of tax at source. This is not a taxing provision; it is an administrative compliance provision. It confirms that FZEs are not beyond the administrative reach of the Nigerian tax system, but it does not disturb the preserved substantive exemptions.
On the Value Added Tax (VAT) end, Section 185(1)(i) of the NTA expressly exempts supplies to a FZE for its approved activity from VAT. This exemption stands independently of the income tax framework and is not affected by the capital-raising question. Additionally, Section 57(3) of the NTA, which deals with the 15% minimum effective tax rate (METR), expressly carves out FZEs, subject to limited exceptions.
The NTA has therefore constructed, in considerable detail, a tax regime that is specific to FZEs, and it is the NTA that will now constitute the “relevant tax laws and regulations” to which Section 95(1)(f) of the ISA refers.
The Interpretive Collision: Does the ISA Proviso Override the NTA?
A full liability interpretation since the enactment of the NTA, that Section 95(1)(f) renders an FZEs fully taxable upon entry into the public market, irrespective of the NTA’s Second Schedule exemptions, cannot withstand scrutiny because the ISA was enacted before the NTA. At the time of the ISA’s enactment, the NEPZ Act and OGEFZ Act exemptions were fully operative. The ISA proviso cannot, as a matter of temporal logic, have been designed to override a framework that did not yet exist in its current form. Its original intent, declaratory and clarificatory, must be its continuing interpretive baseline. Interpreted in conjunction with the NTA, it makes FZEs subject to the terms of the NTA and NTAA and other relevant tax laws in force, thus rendering Section 95(1)(f) merely declaratory of the obvious. The NTA has deliberately preserved FZE exemptions in a modified form; for the ISA to undo that preservation silently and collaterally would be to produce an outcome that the legislature may not have intended.
Furthermore, the deletion and reconstitution of the NEPZ Act and OGEFZ Act fiscal exemptions confirms the NTA and NTAA’s dominance. By amending the NEPZ Act and OGEFZ Act to delete their exemption provisions, the NTA has consolidated the fiscal regime of FZEs. The exemptions that previously lived in the NEPZ Act and OGEFZ Act now live in the NTA’s Second Schedule, refined and time-bounded but substantively preserved. Accordingly, to read the ISA’s proviso as stripping FZEs of the minimised NTA Second Schedule exemptions would be a misread.
If the purpose of Section 95(1)(f)’s proviso is to ensure that FZEs in the public market are not beyond the reach of Nigeria’s tax administration, that they register, file, withhold, and account for taxes, the NTA has already addressed that concern directly and specifically in its paragraph 6 of the Second Schedule. FZEs are already required to comply with the NTAA, regardless of whether they access the capital market. The ISA proviso adds nothing to that administrative compliance obligation; accordingly, it should not, by interpretive overreach, be made to add a substantive tax liability that the NTA does not impose.
CONCLUSION
The ISA proviso does not strip FZEs of tax exemptions upon public market entry; it merely confirms that FZEs remain subject to Nigeria’s “relevant tax laws”, now, the NTA and NTAA substantially. Reading the proviso otherwise would contradict legislative coherence and chronology (ISA came before NTA) and produce the absurd result that public FZEs face harsher taxes than identical private ones. The proviso in the present-day tax reform regime is declaratory, not destructive.
At AO2LAW, we maintain foremost Special Economic Zones (SEZs), Capital Markets, and Taxation Practices. Situated within our Commercial and Criminal Law Practice Group (CCLP), the Practices bring to bear our expertise in policy follow-through, legislative guidance and administrative law, thereby ensuring that appropriate protections, including fiscal exemptions, as provided by the Nigerian state are extended to our Clients’ investments in the SEZs and capital markets.
For further information on the foregoing (none of which is a legal advice) or related matters, please generally contact us at cclp@ao2law.com, or specifically to the key contacts.
Please do not treat the foregoing as legal advice as it only represents the public commentary views of the authors. All enquiries on this should please be directed at the authors.
