Export Incentives and Processing Zones

This set of flashcards covers incentives for free trade and export processing zones, duty drawback schemes, and tax exemptions for export-oriented companies.

What types of taxes are free trade or export processing zones exempt from?

They are exempt from payment of federal, state, and local government taxes.

What is the policy regarding goods imported into a free trade or export processing zone?

All goods imported into the zone are duty free.

What is the level of assurance for the repatriation of capital, profits, and dividends in these zones?

There is $100\%$ assurance of repatriation of capital, profits, and dividends.

Is an import or export license required for operations within these zones?

No, there are no requirements of import or export license.

What percentage of foreign ownership is allowed for companies in export processing zones?

$100\%$ foreign ownership of companies is allowed.

What does the duty drawback or duty suspension scheme provide to manufacturers?

It provides for refunds of duties or surcharges on raw materials, including packing and packaging materials, used for the manufacture of products upon effective exportation of the final products.

Under the new duty drawback scheme, what percentage is given as an automatic refund on initial screening by the duty drawback committee?

$60\%$ on initial screening, upon presentation of a bond from a recognizable bank, insurance company, or other financial institution.

What specific items imported for mining operations in Nigeria are exempted from custom duties?

Plant, machinery, equipment, and accessories imported exclusively for mining operations.

For how long is a wholly export-oriented company established outside the export processing zone exempt from company income tax?

It is exempt for the first $3$ years.

What are the two conditions for a company outside an export processing zone to qualify for the $3$-year company income tax exemption?

The export proceeds must constitute $75\%$ of its turnover and it must repatriate at least $75\%$ of the export earnings in Nigeria.

What are the two types of drawback facilities provided under the duty drawback scheme?

Fixed drawback and individual drawback facilities.

Which export producers are eligible for the fixed drawback facility?

Export producers whose export products are listed in the fixed drawback schedule issued from time to time by the committee.