Top 19 Business Doing Guide

Here is a detailed Guide to doing business in Nigeria.

We begin with an overview of the different forms of Business Enterprises in Nigeria.

A discussion on steps for Registration of a Company and Application for Start-up Approvals is also made.

The article expatiates substantively, The Tax Systems in Nigeria.

Finally, we see a Checklist for Establishing Business in Nigeria.

The hope of this article is to furnish investors with a high-level information base of Nigeria, as regards business.

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This should lead to a tailor-made analysis and more detailed solution.

Which is needed in forming concrete decisions about investing and doing business in Nigeria.

This guide only gives a general worldview of the existing opportunities in the Nigeria business ecosystem.

It is necessary to make much more informed decisions which are both practical, tested and proven in the Nigeria local markets.

This should, of course, be based on sound knowledge of the legislative processes, political climate and economic environment.

Credible advice, you should know, is the cradle of decision making.

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Business Doing Guide

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Business activities may be undertaken in Nigeria through any of the following vehicles; that is:

(i)      Private or Public limited liability Company;

(ii)     Unlimited liability company;

(iii)    Company limited by Guarantee;

(iv)    Foreign Company (branch or subsidiary of a foreign company);

(v)     Partnership/Firm;

(vi)    Sole Proprietorship;

(vii)    Incorporated Trustees;

(viii)  Representative Office.

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2. Business Doing Guide: Business Registration

All business enterprises, both local and foreign must be registered with the Registrar-General of the Corporate Affairs Commission (“Registrar of Companies”), and must comply with the internal regulations applicable to particular businesses.

3.Business Doing Guide: Business Law

The law governing the formation and regulation of business enterprises in Nigeria is the Companies and Allied Matters Act, 1990 (“CAMA”), and under this law is the Corporate Affairs Commission, which is the body responsible for the registration and regulation of companies.

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4. Business Doing Guide:Business Foreign  Investors

Foreigners may invest and participate in the operation of any enterprise in Nigeria.

By virtue of the provisions of the CAMA, a foreign investor, planning towards doing business in Nigeria is obliged to take all steps necessary to obtain local incorporation of a Nigerian company.

The same applies to a branch or subsidiary of an existing company.

Which would be a separate and distinct entity from its parent company.

Until so incorporated, a foreigner may not carry on business in Nigeria or exercise any of the powers of a registered company.

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5.Business Doing Guide: Business Incorporation

The CAMA, however, sets out exceptions to the general rule that all foreign investors doing  business  in  Nigeria must incorporate in  Nigeria.

These exceptions  include  companies  engaged  by  the  Federal  Government  to execute specific projects, companies undertaking approved loan projects on behalf of donor countries or international organizations, and foreign government   owned   companies   engaged   wholly   in   export   promotion activities.

These exemptions are granted for a fixed period of time (usually three years), are hardly  ever  renewed  and  may  be  revoked  by  the  Federal Executive Council.

Investors envisaging a long-term existence in Nigeria are therefore well advised to incorporate a local company.

5. Business Doing Guide: Business Representative

Foreign companies interested in doing business in Nigeria may also set up Representative Offices in Nigeria.

A Representative Office however,  cannot engage  in  business,  conclude contracts or open or negotiate any Letters of Credit.

It can only serve as a promotional and/or liaison office.

In this circumstance, its local operational expenses have to flow in from the foreign company. A Representative Office also must be registered with the CAC.

6. Business Doing Guide: Business Application 

As  stated  earlier,  under  the  Companies  and  Allied  Matters  Act,  1990 (“CAMA”) the body responsible for the registration and regulation of companies is the Corporate Affairs Commission (“CAC”), which has its head office in Abuja, the Federal Capital Territory.

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7. Business Doing Guide: Procedure for Company Incorporation

An application for incorporation is made to the Registrar-General of the CAC. Prior to the application being made, submitting a written application to the CAC, and paying a prescribed fee may reserve the name of the proposed company.  Subsequently the application to the Registrar-General is submitted in the prescribed form along with the following documents:

  1. A copy  of  the  Memorandum  and  Articles  of  Association  of  the Company (which must be subscribed to by at least two persons, together holding at least 25% of the company’s authorized share capital together with evidence of payment of stamp duty.
  2. A statement of the authorized share capital of the company together with evidence that the stamp duty payable in respect of the amount of share capital has been paid.
  3. A statement of the particulars of the initial directors of the company, of which there must be at least two.
  4. A notice of the situation of the registered office of the company.
  5. A declaration, sworn to by a Lawyer that all matters preliminary to the registration of the company have been complied with.

Stamp duty and filing fees are payable to the Federal Commissioner for Stamp Duties and the Registrar – General of Companies respectively.  If the application is approved, a Certificate of Incorporation will be issued and the company  can  commence  business  subject  to  its  having  obtained  the necessary investment approvals.

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8. Business Doing Guide: Investment Authorizations and Approvals

The principal laws regulating foreign investment in Nigeria are, the Nigerian Investment Promotion Commission (“NIPC”) Act No. 16 of 1995, and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act No. 17 of 1995.

Once registration is completed, there are other approvals that the foreign Investor would require, to secure enhanced returns from an investment and remit the proceeds of such investment.   Some of these approvals are mandatory, others are only required where the company wishes to employ expatriates or take advantage of certain incentive schemes.   The non- mandatory approvals are asterisked (*).

9. Business Doing Guide:Registration with the NIPC

The Nigerian Investment Promotion Commission (“NIPC”) was established under the Nigerian Investment Promotion Commission Act, 1995, which provides that any enterprise in which there is foreign participation must be registered with the NIPC.   The NIPC Act permits foreigners to own up to

100% of any business enterprise with the exception of enterprises on the

“negative list” of the Act.  The negative list includes enterprises involved in the production of and dealing in arms, ammunition, narcotic drugs and psychotropic substances.

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10. Business Doing Guide: Procedure for obtaining NIPC Registration

  1. Application is made to the Nigerian Investment Promotion Commission
  2. Completed copies of the NIPC Form 1 (Original and 3 copies)
  3. Original copy of receipt of purchase of NIPC Form 1 (and three copies)
  4. A copy of COMPANYs’ Certificate of Incorporation (and three copies)
  5. Evidence that COMPANY has a minimum share capital of =N=10million. (3 copies)
  6. COMPANYs’ Allotment of shares and Particulars of Directors (3 copies)
  7. Details of the shareholding structure of COMPANY (3 copies)
  8. Joint Venture, Shareholders’ or Partnership Agreement, where applicable (3 copies).

11. Business Doing Guide: Business Permit

In order for an enterprise in which there is foreign participation to undertake any business in Nigeria, it must obtain a business permit from the Ministry of Internal Affairs.   A business permit will only be granted in respect of companies having an authorized share capital of at least =N=10,000,000.00 (approximately 80,000 US Dollars).  One of the documents that a company applying for business permit is required to submit is a Certificate if Capital Importation   to   evidence   the   importation   of   the   foreign   investor’s capital/equity contribution into Nigeria.

12. Procedure for obtaining Business Permit

  1. Application is made to the Ministry of Internal Affairs
  2. Completed copies of the NIPC Form 1 (Original and 3 copies)
  3. Original copy of receipt of purchase of NIPC Form 1 (and three copies)
  4. A copy of COMPANYs’ Certificate of Incorporation (and three copies)
  5. Evidence that COMPANY has a minimum share capital of =N=10million. (3 copies)
  6. COMPANYs’ Allotment of shares and Particulars of Directors (3 copies)
  7. Details of the shareholding structure of COMPANY (3 copies)
  8. Joint Venture, Shareholders’ or Partnership Agreement, where applicable (3 copies).

13. Certificate of Capital Importation

Investors  who  wish  to  be  able  to  remit  dividends  to  non-resident shareholders or repatriate capital on disinvestments must ensure that they obtain a Certificate of Capital Importation from the Nigerian bank through which the payment is transferred into Nigeria.

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14. Business Doing Guide: Procedure for Obtaining Certificate of Capital importation (CCI)

  1. Application will be made to COMPANY’s bankers
  2. The foreign shareholders will instruct their bank (“the remitting bank”) by telex to transfer the necessary funds either directly to COMPANY’s bankers or to their foreign affiliate;
  3. The transfer must be accompanied by a telex stating that the money being remitted to the bank is for the account of COMPANY and that the money represents the foreign investors’ capital contribution to the equity of COMPANY;
  4. Upon confirmation that the funds have been remitted to Nigeria, COMPANY is required to send a formal letter of application to the receiving bank to issue a CCI in respect of the equity contribution.
  5. The following documents must be submitted together with the letter of application:

o A Board resolution of COMPANY authorizing the foreign investment;

o A letter from COMPANY stating the purpose for which the money has been remitted;

o A copy of the certificate of incorporation of COMPANY;

o A copy of the swift message from the remitting bank.

  1. If satisfied with the documentation the receiving bank will issue a CCI in respect of the funds. The receiving  bank is required to notify the CBN whenever it issues a CCI.

15. Business Doing Guide: Expatriate Quota*

A company wishing to employ expatriates must obtain an Expatriate Quota position for each expatriate it wishes to employ.   The Expatriate Quota establishes the maximum number of expatriates that the enterprise may employ.

A  company  having  a  paid-up  share  capital  of  not  less  that =N=10,000,000.0 (Ten million Naira only) (approximately 80,000 US Dollars) is entitled to one automatic quota positions. However, a company capitalized at =N=20,000,000.00 (twenty million Naira only) (approximately 155,000 US Dollars) is entitled to four automatic quota positions.

Procedure for obtaining Expatriate Quota

  1. Application is made to the Ministry of Internal Affairs
  2. In addition to the requirements listed under Business Permit application, the following requirements have to be met for Expatriate Quota applications:
  3. Evidence of acquisition of operational machinery and equipment
  4. Management and Technical Services Agreement
  5. Minimum authorized share capital of =N=10million
  6. Tax Clearance Certificate
  7. Company applying for Permanent Until Reviewed (PUR) Quota slots must show evidence of payment of tax for minimum of =N=1 million.
  8. Names, addresses, qualifications and positions to be occupied by the expatriate
  9. Project Implementation Program
  10. Training Program for Nigerians and a Management Succession Schedule

16. Business Doing Guide: Approval for Transfer of Technology and other Agreements*

By virtue of the provisions of the National Office for Technology Acquisition and Promotion Act, 1992 any agreement under which a foreigner is to provide foreign technology, management, or assistance, to a Nigerian company must be approved by the National Office for Technology Acquisition and  Promotion  (“NOTAP”).     Fees  payable  for  the  provision  of  such technology or services must also be approved by the NOTAP.

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17.Business Doing Guide: Registration with the Department of Petroleum Resources*

Companies that wish to engage in petroleum operations in Nigeria are required to register with the Department of Petroleum Resources (“DPR”). The DPR issues Permits, upon application, in respect of oil exploration and production activities, as well as oil service activities.  Fees payable depend on the category of operations for which the company applies.


18. Business Doing Guide: The Tax Structure and Taxing Authorities

The federal, state, and local governments levy taxes.  The Federal Board of Inland Revenue (“FBIR”) administers Federal Taxes through its operational arm called the Federal Inland Revenue Service (“FIRS”), State taxes are administered by the Internal Revenue Boards of respective States, while the various councils administer local Government taxes.

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Principal Taxes in Nigeria

Taxes on income and gains in Nigeria

  1. Companies Income Tax
  2. Personal Income Tax
  3. Capital Gains Tax
  4. Petroleum Profits Tax

Taxes on transactions in Nigeria

  1. Value Added Tax
  2. Stamp Duty
  3. Customs and Excise Duty

Other taxes in Nigeria

  1. Sales Tax (Lagos State only)
  2. Local Government taxes
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Double Taxation Relief

Nigeria currently has seven comprehensive double tax treaties.  Treaties on income and capital gains are currently in force with:

  1. United Kingdom and Northern Ireland
  2. Canada
  3. France
  4. Netherlands
  5. Belgium
  6. Romania
  7. Pakistan


Business Doing Guide

  1. Incorporate Local Company
  2. Register with  Tax  Authorities  and  Obtain  First  Tax  Clearance Certificate
  3. Open Corporate Bank Account/s in the name of the Local Company and obtain  a  Certificate  of  Capital  Importation  from  the  Bank  in respect of any imported capital sum
  4. Apply for Business Permit and Expatriate Quota
  5. Obtain Residence Permits for Expatriate Staff
  6. Register with  Appropriate  Regulatory  Authorities  Relevant  to  theCompany’s Business (such as NCC, DPR, NAFDAC, )
  7. Secure Office Space/ residential accommodation for Expatriate Staff

These are the first steps to be taken by any person that wishes to establish business in Nigeria.  At the end of the first financial year, the company would be required to file Tax and Annual Returns.  In addition, the Company would be required to appoint External Auditors and a Company Secretary.

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