Nigeria: Should ITF Levy Apply In The Oil And Gas Free Zone?

Last Updated: 25 February 2016
Article by Yomi Olugbenro
Most Read Contributor in Nigeria, July 2017

Whatever the basis on which the Oil and Gas Free Zone Authority listed ITF as one of the levies or taxes payable in the FTZ, the reality is that the average Nigerian citizen is vulnerable on several fronts in his own country

On the wish list of every taxpayer is to have a tax system that is simple, fair and where the associated consequences of any tax treatment is certain. With Free Zones, there is an expectation that the law will mean what it says in letter and in spirit. 

Section 8 of the Oil and Gas Export Free Zone Act (OGEFZA) stipulates, "Approved enterprises operating within the Export Free Zone shall be exempt from all Federal, State and local government taxes, levies and rates". Section 18 of the OGEFZA which sets out the incentives available in free trade zones (FTZs) states emphatically among others that "legislative provisions pertaining to taxes, levies, duties, and foreign exchange regulations shall not apply within the Zone". The OGEFZA provides the regulatory frame work for the designation of FTZs and their administration. The OGEFZA specifically applies to oil and gas companies and operations.

The Industrial Training Fund Act (ITFA) Cap 119 LFN 2007 is one of such legislation which provision should ordinarily not be applicable in the FTZ based on the simple application of the provisions of sections 8 and 18 of the OGEFZA.  However, this appears not to be the case.

The Industrial Training Fund (ITF) was established to provide fund for the promotion of and encouragement of skills acquisition in Nigeria with a view to having enough indigenous trained manpower to meet the needs of industries for the growth of the economy while providing jobs and creating wealth.

The confusion as to the applicability of ITF Levy in the FTZ is reinforced by the 2011 amendment. Section 6 (3) of the ITFA 2011 states as follows:

"Any liable organization, public or private including companies situate in the free trade zone requiring approval for expatriate quota/or utilizing custom services in matters of export and import, must show proof of compliance with this Act in respect of payment of training contribution of his employees and all regulatory agencies of the Federal Government shall ensure compliance with section 6 (1) – (3) of this Act"

However, Regulation 3(8) of the Oil and Gas Free Zone Regulations 2003 ("the Regulation") provides that foreign staff employed by registered enterprise shall not be liable to immigration quota system. Further, Regulation 3(5) states that a registered enterprise shall not require import and export license to bring in goods into the free zone.  Where an entity's operation is fully (100%) in the free zone and consequently would not require approval for expatriate quota or import and export licenses, is it safe to assume that ITFA will not apply and as such FZE will not be required to deduct ITF?

The word 'levies' used in S.8(1) in the Principal ITF Act was replaced with 'contribution' in the Amendment Act.  Does this subtle change affect the impact? Does it mean that approved free zone enterprises (FZEs) will be exempted from taxes and levies and not contributions?

In 2015, the Oil and Gas Free Zone Authority issued a public notice to the effect that they have set up a tax administration unit. Consequently, with effect from January 2015, all free zone licensees were prohibited from having any direct interface with the Revenue authorities without reference to the authority.  However, the authority seem to have tacitly acknowledged the fact that licensees may be subject to ITF when it listed ITF as one of the taxes payable by licensees in the FTZ.

Prior to the amendment in 2011, the Minister of Trade and Investment was vested with the power to determine the liability of an employer to pay contributions to the fund but in the Amendment Act, the Court is now vested with this power.  This is significant, in that a purely administrative process has been converted to a judicial process.  Thus, a FZE that holds the view that ITF should not be applicable may have no other option than a recourse to the Courts for relief.  A more appropriate approach would be to evaluate this ambiguity and eliminate it via appropriate clarification.  This promotes certainty and saves the taxpayers (in this case the FZEs) avoidable professional costs on lawyers and tax advisers as well as administrative time that could be put to other more productive endeavours in the business of the FZEs.

In conclusion, whatever the basis on which the Oil and Gas Free Zone Authority listed ITF as one of the levies or taxes payable in the FTZ, the reality is that the average Nigerian citizen is vulnerable on several fronts in his own country.  Available evidence have not reinforced sufficient assurance that the various agencies and parastatals of government are really busy looking (or would look) after him. This remains the crux of the dilemma whether or not ITF should apply in the FTZ.  Perhaps, it is because of considerations such as this that FTZs in Nigeria have presented a Jekyll and Hyde profile and have not granted absolute exemptions. 

To the extent that contributions to ITF are geared towards encouraging and promoting skills acquisition in commerce and industry in a bid to create a pool of trained manpower necessary to meet the needs of the economy, no sector of the economy should enjoy exemption from this important responsibility.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Yomi Olugbenro
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.