Central Bank of Nigeria, CBN, said it has exempted banks operating within Free Trade Zones from payment of withholding tax deductions on interest payable on deposits, dividends and royalties. This was stated in the guidelines for banking operations in the free zones in Nigeria, 2016 posted at the apex bank website yesterday.
CBN, which explained that the action was in line with the powers conferred on it by sections 2(d) and 47 of the Central Bank of Nigeria Act, No. 7, 2007 (the Act) also said it was part of incentive been provided for banks to operate within the zones. Other incentives include; exemption from corporate and capital gains taxes; exemption from payment of duties on imports of furniture, office equipment and other facilities necessary for its operations; and exemption from payment of value added tax and any other incentives as may be approved by the authority, from time to time.
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The statement said: “Pursuant to the relevant provisions of the Free Zones Acts, a bank operating in Nigeria’s FZ shall enjoy the following incentives -freedom to move funds in and out of the zone on all eligible transactions; exemption from stamp duties on all its documents.
CBN also stated that banks in the FZs may maintain correspondent banking relationships with licensed banks in the Nigeria Customs Territory and overseas. However, permissible activities for a licensed bank in the FZ include: to take deposits and maintain current and saving accounts from natural and legal persons; provide retail banking services; grant to any person, advance, loans, or credit facility, or give any financial guarantee, or incur any other liability on behalf of any person; make remittances of funds abroad or to Nigeria Customs Territory on behalf of any non-resident. Others are to deal in foreign exchange and provide foreign exchange services, subject to the requirements of the Foreign Exchange (Monitoring & Miscellaneous Provisions, etc) Act Cap. F35 Laws of the Federation of Nigeria 2004, any other law and CBN Regulations made pursuant thereto.
