The State Government has obtained approval from NEPZA, for the development of the free trade zone. A minimum investment of $500,000 is required by approved enterprises to operate in the free trade zone.
The incentives for LFTZ include:
» Exemption from all forms of federal, state and local government taxes, levies and rates.
» Duty free import of capital equipment, machinery, raw materials components and spare parts
» Freedom from legislative provisions pertaining to taxes, levies, duties and foreign exchange regulations
» Up to 100% foreign ownership of businesses
» Repatriation of foreign capital investment at any time with capital appreciation of the investment
» Unrestricted remittance of profits and dividends earned by foreign investors
» No import or export licences required in the zone.
Industries with high labour/capital ratio are entitled to tax concessions.
» 100 persons – 6% tax concession
» 200 persons – 7 % tax concession
» 1,000 persons or more – 15% tax concession
» SMEs have a 10% reduction in tax rate to be paid in the first 5 years of commencing business
» Dividends from small manufacturing companies are exempted from tax for the first 5 years of business operations.
» Five-year tax holiday in respect of industries located in economically disadvantaged local government area of the Federation
» Up to 10% of profits set aside as reserve for Research and Development qualify as allowable expenses
» Up to 120% of expenses on Research and Development are tax deductible provided that such research and development activities are carried out in Nigeria and are connected to the business from which income or profit is derived