ABSTRACT
Both forms of tax incentive, that is, direct and indirect, are substantial benefits to any free zone user. However, these depend upon the activities carried out by the zone user. The ideal free zone facilities should include a combination of both direct and indirect tax incentives, plus the ability to manufacture goods in the zone for re-export or for release into national free circulation based on the tariff inversion principle as described earlier in the text. This flexibility gives far more incentives for companies to use the free zone for either production, storage or general operation purposes. Supporters argue that benefits can arise due to the government stimulus or tax incentives and breaks available. There can also be some benefits due to the ‘agglomeration effect’, which is where increased economic benefits are seen as a result of concentrating the economic activity of a particular sector, or related sectors, in one place.
