Second Schedule: Export processing and free trade zone entities

1. This schedule applies to the export processing and free trade zones, (the zones) and approved export processing and free trade zone entities, (the entities).

2. In this Schedule — (a)"export processing zone entity" means an approved and licensed enterprise under the Nigeria Export Processing Zones Act Cap. N107, Laws of the Federation of Nigeria, 2004 ; and

3. Subject to paragraph (4) of this Schedule and the provisions of section 57, the profits of an export processing zone entity are fully exempt from tax where —

4. Where, in a year of assessment, more than 25% of the sales of an export processing zone entity arise from the sale of goods or services in the customs territory, tax shall accrue in Nigeria on the profits of the entity in respect of its total sales to the custom territory.

5. Notwithstanding the provision of paragraph 3(ii) of this Schedule, the profits of an export processing zone entity shall be fully subject to tax effective from 1 January 2028, in respect of its sales to the customs territory in Nigeria, regardless of the percentage of the sales.

6. Notwithstanding the provisions of this Schedule or any other law, an export processing or export free zone entity shall comply with all relevant provisions of the Nigeria Tax Administration including those requiring —

7. Where an entity in a zone contracts out manufacturing services or any of its approved activity within the zone to a related or connected resident company that is not an entity in the zones, all incomes derived from the sale by the entity in the zone, of the goods produced shall be treated as the incomes of the related or connected resident company, except the Service is satisfied that the transaction provided was conducted as arm's length.

8. Where a resident company, which is not an entity in the zones, provides services other than manufacturing services to a related or connected entity in the zones, the provisions of the Transfer Pricing Regulations shall apply to the transaction.

9. Services rendered to an export processing or export free zone entity by a person in the custom territory or services consumed by a free zone entity

10. For the purpose of this paragraph, licensed entities shall be required to provide evidence of export proceeds, either in cash inflow or imported raw materials or equipment, as a condition to claim the tax incentives.