Nigeria’s ongoing tax reform efforts reflect a broader ambition to modernize its fiscal framework, enhance revenue generation, and establish a more structured as well as a transparent tax environment. The Nigerian tax reform Acts (the Acts), comprising the Nigeria Tax Act, 2025; Nigeria Tax Administration Act, 2025; Joint Revenue Board of Nigeria Act, 2025; and Nigeria Revenue Service (Establishment) Act, 2025, mark a significant milestone in this journey. These reforms aim to consolidate existing tax laws, streamline incentives, and close longstanding loopholes. However, while the reforms promise a more efficient tax regime, they have sparked considerable debate, particularly concerning their impact on Nigeria’s Free Trade Zones (FTZs).

Since the enactment of the Nigeria Export Processing Zone Authority (NEPZA) in 1991 and the subsequent establishment of the Calabar Free Trade Zone, FTZs have played a pivotal role in Nigeria’s strategy to attract Foreign Direct Investment (FDI) and drive industrialization. Designed as economic enclaves, these zones offer businesses relief from taxes, levies, duties, and foreign exchange restrictions, making Nigeria an attractive destination for global investors. As noted by Torres A. Raul1, free zones globally pursue consistent economic goals such as regional development, job creation, FDI attraction, and technology transfer, all of which Nigeria has actively pursued for over three decades.

As of September 2025, the NEPZA2 reports that the country is home to 42 free zones and over 500 licensed free zone enterprises, operating across all
six geopolitical zones. These zones promote seamless trade and have collectively attracted more than $200 billion in investment inflows to date3. Importantly, these businesses also contribute to the local economy through supply chain integration and workforce development.

In the past five years alone, FTZs have contributed more than ₦620 billion to government revenue through agencies such as the Nigeria Customs Service, Nigeria Ports Authority, and Free Zone Regulatory Authorities4. Specifically, NEPZA reported that the FTZ Scheme generated a total of ₦35.1 billion in Customs Duty in 2021. The authority also noted that ₦408 million5 and ₦998 million6 were remitted as Personal Income Tax in 2021 and 2023, respectively. Additionally, they have created over 100,000 direct jobs, with many more indirect employment opportunities across various sectors.

The newly passed Nigeria Tax Act (NTA), 2025, eliminates long-standing tax exemptions and introduces levies on FTZ businesses. This has raised concerns about the potential erosion of investor confidence,
the risk of capital flight, and the possibility of stalling industrial growth.
This article explores the potential implications of the Nigerian Tax Reform Acts, 2025 on Free Trade Zones. It examines whether the proposed changes will strengthen or weaken Nigeria’s investment climate and considers the broader impact on businesses, employment, and economic development.

Is this a necessary step toward tax harmonization, or does it risk undermining a successful economic strategy?