GUIDE TO FOREIGNERS WISHING TO DO BUSINESS IN NIGERIA

This guide was carefully designed to give investors a general insight and overview of Nigeria’s business environment that will hopefully lead to a thorough analysis required in making informed decisions about doing business and investing in Nigeria.

 

Nigeria is a federal republic made up of 36 states and Abuja the Federal Capital Territory (FCT), with the largest population in Africa and the sixth in the world. The 36 states and Abuja FCT are further grouped into six(6) Geo-Political Zones: North Central; North East; North West; South East; South-South; South West;

The six Geopolitical groups with their state components are: North Central (Niger, Nasarawa, Kwara, Kogi, Benue, Plateau & Abuja FCT); North East (Adamawa, Bauchi, Borno, Gombe, Taraba, and Yobe States), North West (Sokoto, Katsina, Jigawa, Kano, Zamfara, Kaduna & Kebbi States); South East (Anambra, Abia, Enugu, Ebonyi, & Imo States); South-South (Edo, Delta, Cross River, Akwa Ibom, Rivers & Bayelsa States); South West (Oyo, Osun, Ekiti, Ogun, Ondo & Lagos States)

To decide on the first set of your branch locations within Nigeria, you may consider starting by choosing the states with more economic and business activities in each geopolitical zone. Thereafter, spreading to other states may follow gradually. Here are the states with the first and second most economic and business activities per geo-political zones: North Central: Abuja FCT & Niger State, North East: Adamawa & Bauchi, North West: Kano & Kaduna States, South East: Anambra & Abia State, South-South: Rivers & Akwa Ibom States, South West: Lagos & Ogun States.

However, the low-hanging fruit locations are: Lagos State, River State, and Kano State

Business can either be sales of goods/items in Nigeria, rendering of services in Nigeria, or a mix of both. Where the business involves sales of goods or items in Nigeria, the source of the goods or items for sales can either be PRODUCED or MANUFACTURED locally by the foreign company or sourced as finished products by way of IMPORTATION. Where importation will be involved, the step-by-step importation guide is provided below in a separate chapter.

  1. To establish a presence in Nigeria (Four Ways)
  2. To obtain necessary permits and operational license (where applicable)
  3. To consider if expatriate (Foreign staff) will be needed as ground staff or not
  4. To open bank accounts with any of Nigeria Commercial Bank
  5. To Consider and identify suitable existing Government Incentives available to tap into
  6. Getting familiar with the applicable Nigeria taxation terrain and compliance obligations
  7. Consider if there are any Intellectual Property needing protection

There are four (4) ways a foreigner wishing to do business in Nigeria can establish its presence in Nigeria. The ways are enumerated below:

1. Register a Company with the Corporate Affairs Commission (CAC) in Nigeria.

The company can either be registered as a Subsidiary, Branch, or mere representative (Cost-Plus entity) of the Foreign entity. What determines whether a Subsidiary, Branch, or mere representative is the way the Object Clause of the Memorandum and Article of Association is worded in line with any existing agreement or non.

To register a foreign Company in Nigeria a minimum of 100 million shares is required whenever a Foreigner is to be listed as part of the shareholders. This is in line with the Business Permit requirement standard set by the Ministry of Trade, Industry, and Investment.

The cost of foreign company formation includes a Stamp duty of N1.50k per every 200 shares plus an additional N1,000 as fixed charge will apply and be paid as document taxes on the share capital. Another applicable cost is the filing fees with CAC which is calculated as N10,000 for the first 1,000,000 shares and N5,000 for additional 1,000,000 shares.

A Company in Nigeria is permitted to have 100% foreign ownership (except if it operates in specific sectors like Oil & Gas, Aviation, and Domestic Coastal operations which will require at least 50% Local participation), however, It is mandatory for a Company having foreign participation to have a minimum of two shareholders and two directors. At least one of the Directors must be resident in Nigeria.

Upon successful incorporation of the foreign company, further registration is required with the Nigeria Investment Promotion Council (NIPC). The registration with NIPC guarantees foreign investments in Nigeria from expropriation.

Registration under this method is in line with the Company and Allied Matters Act (CAMA), 2020 (As Amended). Also, all post-registration corporate governance activities are governed by the same CAMA, 2020. Companies are expected to file Annual Returns (Audited Financial Statements and prescribe Filing fees) to CAC.

2. Locating your business operations in a Free Trade zone (FTZ).

FTZ is originally reserved for companies that engage in PRODUCTION or MANUFACTURING of products for major EXPORT and such companies will usually take priority. When you locate your business in a Free Trade Zone in Nigeria, you do not need to Register a Company with the Corporate Affairs Commission (CAC).Any entity resisted in any FTZ would have a suffix FZE at the end of its name.

Free Trade Zones are “export Processing Zone” where the majority of their final products are expected to be exported rather than sold in other parts of Nigeria’s territory (known as “Custom Territory). Benefits attached and attributable to FTZ entities are :

  • 100% capital and profit repatriation,
  • Exemption from all federal, state, and local government taxes, levies, and rates,
  • Exemption from Quota Application from the Ministry of Interior, and
  • Waivers on customs and import duties.

Notable ACTIVE Free Trade Zones available in Nigeria are listed below:

S/NFREE TRADE ZONE (FTZ)OPERATING STATUSDEDICATED FOROWNERSREGULATOR
1Calabar Free ZoneOperationalGeneral PurposeFederal GovernmentNEPZA
2Kano Free ZoneOperationalGeneral PurposeFederal GovernmentNEPZA
3Lekki Free ZoneOperationalManufacturing, oil and gas, commercial business and infrastructural investments like seaports and power plants.State Government and PrivateNEPZA
4Tinapa Free Zone and Tourism Resort, Cross River StateOperationalTrading and TourismState GovernmentNEPZA
5Onne Oil and Gas Free Trade Zone, River StateOperationalOil and gasPublic Private PartnershipOGFZA
6Gas Export Free ZoneOperationalGeneral Purpose NEPZA
7Olokola Free Zone, Odo Ado, Ogun StateOperationalGeneral Purpose NEPZA
8Centenary City, AbujaUnder ConstructionGeneral Purpose NEPZA
9Ladol Free Trade ZoneOperationalProvision of logistical, engineering and other support services for deep water offshore oil and gas explorationPrivateNEPZA
10Lagos Free Trade ZoneUnder ConstructionGeneral PurposeState Government and PrivateNEPZA
11Dangote Industries Free ZoneUnder ConstructionRefinery, petrochemical and fertilizer companiesPrivateNEPZA
12Ogun Guangdong Free Trade ZoneOperationalManufacturing and raw material processingPublic Private PartnershipNEPZA
13Brass Oil and Gas CityOperationalOil and GasState Government and PrivateOGFZA
14Snake Island Integrated ZoneOperationalGeneral PurposePrivateNEPZA
15Warri Oil and Gas free ZoneOperationalOil and GasFederal GovernmentOGFZA
16Eko Atlantic Free ZoneOperationalGeneral PurposePrivateNEPZA
17ALSCON Economic Processing ZoneUnder ConstructionGeneral PurposePublic Private PartnershipNEPZA
18Tomaro Industrial ParkUnder ConstructionGeneral Purpose NEPZA
19Liberty Oil & Gas Free ZoneOperationalOil and Gas OGFZA
20Notore Industry CityOperationalOil and Gas OGFZA
21BESTAF Maritime Industrial Oil & Gas Free ZoneOperationalOil and Gas OGFZA
22Secured Bunkering Anchorage Oil & Gas Free ZoneOperationalOil and Gas OGFZA
23Orashi Special Energy Oil & Gas Free ZoneOperationalOil and Gas OGFZA

*OGFZA (Oil and Gas Free Zones Authority) is the regulatory agency supervising operations of the oil and gas Free Trade Zones (FTZ) in Nigeria.

*NEPZA (Nigeria Export Processing Zone Authority) regulates the operation of Free Trade Zones (FTZ) other than the Oil and Gas FTZ

*Companies located at FTZ have dedicated Tax Offices within FIRS (Federal Inland Revenue Service).

3. Application for Exemption for physical Foreign business operation in Nigeria without registration With CAC in Nigeria or Location in FTZ.

To achieve this, an application is made to the MINISTRY OF TRADE, INDUSTRY AND INVESTMENT

This only applies to the instances below otherwise Registration with CAC is required:

  • Foreign companies invited by the Federal Government to execute a project
  • Foreign companies with a mission to execute loan projects on behalf of a Donor country or International Organization
  • Foreign Government entities engage solely in export promotion activities
  • Engineering consultants and technical experts executing any individual specialist project under contract with any Federal Government agencies or any other body where such contract has been approved by the Federal Government.

4. Operate as a Non-Resident Company through a Permanent Establishment (PE) or a fixed base that assumes responsibility on its behalf for local taxes, payments, and regulatory compliance purposes

This will not require the physical presence of the Foreigner in Nigeria but rather operation will be done through a nominee (mostly a company engaged in Company Secretarial services or accounting firms). This nominee will act as the Permanent Establishment or Fixed Base

This method will be more effective in applications where there is an Agreement covering services provided by a non-resident company to a local Nigerian company. To guarantee foreign currency, such an agreement is required to be registered with NOTAP (National Office for Technology Acquisition and Promotion) as a pre-condition to procure foreign currency from its authorized bankers for repatriation of fees payable under the agreement (such as royalties, management fees, software licenses, etc. The Fees payable under the agreement must not exceed limits prescribed by the NOTAP and the CBN. The agreement must specify the services to be provided or the features of the process or product being licensed.

The function of the appointed Nominees (The Permanent Establishment or Fixed Base) is basically to assist in Making Local payments regarding salaries to local staff, transaction taxes where applicable, payments to local service providers and suppliers, and any relevant regulatory bodies.

Nominees will also be useful to facilitate the repatriation of income of a non-resident company from its local customers where applicable. Note, such receipts can be wired directly from the Customers directly to the Foreign company in its home country. The Nominee’s work is mere facilitation.

Tax liabilities for such non-resident companies will be based on audited accounts similar to Nigerian companies. A dedicated FIRS (Federal Inland Revenue Service) office is created for Non-Resident Companies tax matters.

SPECIAL NOTES ON NON-GOVERNMENTAL AGENCIES (NGOs)

Non-governmental agencies (NGOs) are typically non-profit organizations and they play an increasingly important role in development cooperation on issues of public interest. There are no restrictions in NGOs provided that the purposes for which the group is formed, or the methods that it uses are not in themselves illegal. While not every group or association needs to be registered, if an NGO considers it important to have a legal personality, it must be registered as either a company limited by guarantee or as incorporated trustees under the Companies and Allied Matters Act. Where the legal personality of the NGO is not required, an application for Registration Exemption may be filed with the Ministry of Trade, Industry, and Investment

To ensure Sector-Specific License are obtained where applicable, a foreign company must enquire about the licenses required to do business in its preferred sector of operation. Some sectors requires special licensing requirements that must be fulfilled by business operators in Nigeria.

The need to obtain a permit, certificate, or license in Nigeria will differ depending on the goods or services involved.

SON Related Permits and NAFDAC Permits sometimes require Pre-Shipment Inspection that has to be done at the country of origin before the goods proceed to Nigeria. This Inspection is done through accredited agents abroad.

S/NCERTIFICATES, PERMITS OR LICENSEINSTANCES WHERE REQUIREDREGULATORY AGENCY
1SON RELATED PERMITS: SONCAP permit, Product Certificate, and SON Import PermitSON issues three (3) types of certificates (1) Product Certificates (2) SONCAP Certificates and (3) SON Import Permit. All the Certificates and Permits are only for product importation to Nigeria. In Nigeria, the intention to import a product is officially made known through Form M. FORM M is open via e Nigeria’s Single Window PortalStandard Organization of Nigeria (SON)
2NAFDAC PermitTo be obtained where detergents, medical devices, packaged water, Cosmetics, Drugs, and Food are involvedNational Agency for Food and Drug Administration (NAFDAC) Permit
3DPR PermitsTo be Obtained where Petroleum resources, Oil and Gas, and LPG are involvedNNPC Department of Petroleum Resources (DPR) Permits
4Pharmacy store Permit and NDLEA ClearancepharmaceuticalsPharmaceutical Board and National Drug Law Enforcement Agency (NDLEA)
5Mining license and permitTo be obtained Where Mining will be involvedMinistry of Solid Minerals
6Engineering service  
7PowerFor certain Power equipment like Transformer and setup of Power generating companyNigerian Electricity Regulatory Commission (NERC)
8Banking LicenseWhere Banking or Fintech Companies engaging in Financial Services

Central Bank of Nigeria (CBN)

9Telecommunication NCC (Nigeria Communication Commission)
10NCAA licensesFor Aviation Business. To be procured fromNCAA (Nigerian Civil Aviation Authority)
11Shipping and maritime-related businessWhere maritime operations are involvedNigerian Maritime Administration and Safety Agency (NIMASA)
12NITDA PermitFor certain IT (Information Technology) Products.National Information Technology Development Agency (NITDA)
13NAQS PermitWhere agricultural seeds and animals are involvedNigeria Agricultural Quarantine Services (NAQS) Under the Ministry of Agriculture
14NESREA PermitWhere Second-hand or fairly used items are involvedNESREA (National Environmental Standards and Regulations Enforcement Agency)
15FEC PermitMilitary wares and equipmentFederal Executive Council (FEC) of the Federal Government
   

SON PRE-INSPECTION AGENTS (International Accreditation Firms (IAFs)

S/NName of AgentWeb Address
1Cotecna Inspection Limitedhttps://www.cotecna.com/
2Intertek testing services Nigeria limitedhttps://www.intertek.com/
3Société Generale de Surveillance (SGS)https://www.sgs.com/en-ng/
4China Certification and Inspection Group (CCIC)https://www.ccic-fct.com/
5Bureau Veritas GSIT SAS (BV)https://www.bureauveritas.ng/
6China Standard Inspection Company Limited (CSIC)http://www.csicgroup.com.cn
NAFDAC PRE-SHIPMENT AGENT
     
S/NName of AgentCountryAddressTelephone No & Email Address
1Guangzhou Test Technology Consulting Co. LtdChinaRM16-20, 15/F, Huagang Business Building, 140 West Zhong Shan Road, Guangzhou 510630, P.R. ChinaTel: 00986-20-38023050,
 
E-Mail: testg2@12Qi.com test_gz@126.com
2Shanghai Hanlin Laboratory Ltd.ChinaRoom J. 15 Floor, No 58, Liuhe Road, (no. 1 plaza), Shanghai 200001 ChinaTel: 18930806449
 
Email: jacky.cheng@hanlinlab.com
 
 
3NHU LaboratoriesChinaRM1710, Ego Science & Technology Building No 555, Wensan Road Hangzhou City, China

Tel: 0571-88909600

Email: linxy@xznhu.com

 
 
4China Standards Tech. Services Ltd (CSTS)China1-3F, 31 Xizhaosi MidStreet, Dongcheng District Beijing, China,

Tel:+861067151811

EMail: CSTS2000@126.com

 
 
5QCS Labs LLPIndiaUnit no. 111 & 112 1st Floor Anurag Business Centre, Near New Amar Cinema, Chembur, Mumbai-400071

Tel: 9820515765

Email: Inspection@qcs.net.in

rwgudal@gmail.com;

 
 
 
 
6Silis Labs PVT Ltd.India505, Safal Prelude, Opp. Prahaladnagar AUDA Garden, Satellite Road, Ahmedabad-380 015, Gujarat, India.

Phone: 9825339972

E-mail: rahul@silislabs.com; divya@silislabs.com; support@silislabs.com

 
 
7Assurance Analytical  PVT Ltd.India112, Lotus Corporate Park, Ram Bang Road, Off SV Road, Behind State Bank of India, Malad West, Mumbai – 400064

Tel:

E-mail: assuranceanalyticspvtltd@gmail.com

 
 
8Quntrol Laboratories Private Ltd.India504 508- 10 5th floor, plot 21, Panchratna, Mama Parmanand, Marg Opera House, Girgaon Mumbai 400004

Tel: 9820166225, 9930279149

Email: r.javeri@quntrol.

 
 

*Foreign Inspection cost may be waived if the foreign manufacturing company has an existing GMP (Good Manufacturing Practice) Inspections Certification

 

 

Items that Require SON related Permits are:

Chemical products
Fertilizers
Textile and textile products
Tobacco products
Footwear
Toys and childcare products
Electrical (including Electrical Fittings) and Electronics products
Mechanical products
kerosene stoves
Vehicles, motorcycles, and their parts
Others (Hurricane Lamps, Locks, Nails Hand Tools, Bicycles, Auto spares Shock
Absorbers, Fan Belts, Safety Belts, Brake pads, Spark Plug

 

NOTE: Any items that are regulated by other sectorial regulatory bodies are exempted from SONCARP Certificates.

 

The Immigration Act precludes any person other than a Nigerian citizen from accepting employment (not being employed by the Federal or State Government) without the consent in writing of the Minister of Interior.

Foreigners coming to Nigeria for business prospects or temporary work have two (2) main entry permits available. They are regarded as Non-Resident foreigners under these circumstances:

  • Business visa
  • Visa-on-Arrival
  • Temporary Work Permit (TWP)

Expatriation is a method of employing foreign individuals on a more permanent basis, Companies seeking to employ expatriates must first apply for and be granted an (EQ). The EQ scheme is designed to prevent the indiscriminate employment of expatriates where there are qualified and suitable Nigerians to fill such positions.

EQ is only granted to companies, Business Name, Partnership entities, and NGOs (Company Limited by Guarantee or Incorporated Trustees)

EQ basic Requirements includes:

  • Two (2) Nigerians to be mentioned per expatriate quota position for understudy purposes,
  • A detailed training programme for those Nigerians with proposed salaries is required to be provided.
  • Evidence of work at hand,
  • Evidence of registration with CAC,
  • Evidence of permanent operating premises,
  • Evidence of foreign inflow of cash (Certificate of Capital Importation- CCI), and
  • Operational license where applicable.

After Expatriate Quota (EQ) is secured, the next step is to process for STR (Subject to Regularization) Visa through the Nigeria Embassy in the Home Country of the Foreign individual. The STR Visa will enable the Foreign individual to travel down to Nigeria. Once in Nigeria The STR Visa will then further be process to CERPAC (Combined Expatriate Residence Permit and Aliens Card). The validity of the STR Visa is 90 days during which an application will be made to the immigration to regularized as CERPAC. In Nigeria, CERPAC equals both Work and Resident Permit.

Expatriate quota when issued is valid for 3 years in the first instance, renewable biennially for two consecutive times with a lifespan of 7 years except for approvals for companies in the oil and gas industry, whose approval will be for an initial period of 2 years and renewable once within a lifespan of 4 years.

CERPAC issued is valid for 3 to 5 years depending on options opted for and subject to renewable afterwards.

 

A Bank is needed as authorized foreign currency dealer on behalf of the company and Central Bank of Nigeria (CBN). Apart of the base local currency of Naira, Bank accounts can also be denominated in Euro, GP Pounds and US Dollars. Bank account will be needed to received foreign inflow of cash (a pre-condition for processing Certificate of Capital Importation -CCI).

As a condition to operate a Bank Account in Nigeria, All Directors and Shareholders are required to have BVN (Bank Verification Numbers). For ease of processing this BVN, dedicated convenient centers are located in several countries for easy access and processing. The requirement for BVN registration is a valid Photo Identity Card and a passport photograph. FIND BELOW CONTACT FOR VARIOUS LOCATION ADDRESS FOR BVN REGISTRATION OUTSIDE NIGERIA.

 

An important Challenge in Bank Account opening by foreign company is that a person that is non-resident in Nigeria is not permitted to be a signatory to any bank account in Nigeria, even if such a person owns a registered company in Nigeria. This means if all the Directors of the Foreign companies are Non-resident, it means none can be signatory to the Bank Account and that is why it’s a requirement that at lease one of the Director should be a resident. If we have one of the Director as Resident (that is, either having a Nigerian as one of the Director or an already existing foreigner with CERPAC), then there will be no issue surrounding signatories, such Directors qualifies to be signatory.

However, in situation where we wanted any of the non-resident Foreign Directors to be signatories, we need to process such Director as expatriate.  In practice, we might not need to complete the process of Expatriate before opening a bank account, the faster way to work around this is to appoint a local Company Secretary and make him or her a temporary sole signatory pending when the Expatriate process will be completed. Nonetheless, while the Company Secretary is serving as sole signatory and due to the technology advancement in the banking system, the Non-resident Directors can run the bank account via Online Banking Platform to be processed on their behalf by the Company Secretary.

 

 

 

 

 

 

 

 

 

 

 

 

 

S/NGOVERNMENT INCENTIVESFURTHER DESCRIPTION
1Capital and profit repatriation without hindrance provided the foreign investor has a Certificate of Capital Importation (CCI)This incentive will apply if a Certificate of Capital Importation (CCI) is obtained from CBN via your Authorized Banker in Nigeria. The Basic requirement for CCI is a foreign inflow of foreign-denominated Cash or Equipment. Interest on foreign loans received for business is exempt from taxes at different periods and graduated rates. Such loans must be brought in through Government Approved Channels (i.e. a Nigerian Bank) and a Certificate of Capital Importation must be processed in respect of the loan capital.
2Pioneer StatusUpon satisfaction of certain conditions, pioneer status is granted to companies in an industry that is categorized as a pioneer industry and these companies qualify for a tax holiday for 5 years (3 years initially and renewable for a further 1 or 2 years upon application). There are special rules on computing the profits of the company that will be exempted from company tax (as well as the amount of dividend that will be exempted from withholding tax).
3Incentives available for Free Trade Zone (FTZ)No Expatriate Quota restriction, no transaction taxes (VAT, Withholding tax, and Capital Gain Tax- CGT), Zero import and export duties, No Custom duties, and No corporate tax.
4Waiver on Custom DutiesNigeria is a member of the Economic Community of West African States (ECOWAS) and adopts the ECOWAS Trade Liberalization Scheme (ELTS) which provides an exemption from custom duties and taxes on goods that meet the “Rules of Origin” from any of the ECOWAS countries. The ETLS ensures that goods can be circulated freely without payment of taxes or customs duties with similar effects on imports as well as putting measures in place aimed at facilitating trade and reducing paperwork at borders.
5Incentives available to the Energy sector (Gas Utilization Incentives)Companies involved in the utilization of gas would enjoy a tax-free period of 3 years which may be renewed for a further 2 years or a 35% investment allowance and Tax-free dividend during the tax-free period.
6Incentives available for Petroleum upstream operationsIncentives include Lower tax rates and graduated royalty rates to encourage offshore production, Tax-free dividends, and Petroleum investment allowance and investment tax credits
7Incentives available to the Power sectorIncentives include pioneer status as well as gas utilization incentives. Further incentives are Exemption from VAT on plant and equipment acquired to generate electricity and Exemption from import duties on plant and equipment imported to generate electricity through the utilization of Nigerian gas
 Export Expansion Grant (EEG)The incentive allows exporters to earn grants that can be used for importing raw materials and machinery for production.

 

Once the registration of Companies is done or where a business presence has been established in Nigeria, registration with FIRS (Federal Inland Revenue Service) will fall in line. In Nigeria, the Registration with FIRS is AUTOMATIC upon registration but that of Non-Resident companies has to be manually done.

However, despite any AUTO registration, further registration is required to obtain LOGIN access Details (Dedicated Email ID and password) to some key Relevant compliance portals for remote filing of necessary tax returns and Importation purposes on the Nigeria Single Window Trade (NSWT) Portal where importation of items will be involved.

Apart from the FIRS (Federal Inland Revenue Service) which is central, we also have the Internal Revenue Service to all the states in Nigeria.

FIRS handles tax matters relating to companies while the States Internal Revenue Service handles taxes relating to individuals (specifically local staff and expatriates)

S/NTYPE OF TAXESDESCRIPTIONRELEVANT TAX AUTHORITY
1Company Income Tax (CIT)Tax is based on the reported profit of a company. The Rate of tax applicable ranges from zero to 30% depending on the Turnover reported in the Audited Financial Statement. Annual Tax Returns are to be filed annually with the FIRS and this is done not later than 6 months after the company’s accounting year end. The Annual Tax Returns is the Audited Financial Statement (AFS) and some Tax Computations,Federal Inland Revenue Service (FIRS)
2Education Tax Levy (EDT)

This is in the form of a levy to all companies to support education levels in Nigeria. The Rate is 2.5% of the reported Profit of a company. The Annual Tax Returns under the Company Income Tax (CIT) cover this tax, therefore, no need for separate Tax Returns.

Federal Inland Revenue Service (FIRS)
3Petroleum Profit Tax (PPT)

Petroleum Profits Tax is imposed on the income of companies in petroleum operations. Companies liable to PPT are not liable to Companies Income Tax (CIT) on the same income.

(1) For Joint Venture and Sole Risk Companies in their first five years of operation, the rate of tax is 65.75% of profit.

(2) For Joint Venture and Sole Risk Companies in operation for more than five years, the rate of tax is 85% of profit.

(3) For a Company under a Production Sharing Contract, the rate of the tax is 50% of profit.

Federal Inland Revenue Service (FIRS)
4Pay as You Earn (PAYE)This is a tax applicable to Salaries earned by Nigerian or expatriate Staff working in Nigeria. The tax rate is not fixed but rather a combination of multiple slice rates depending on salary bands and that is why the Tax is called Pay As You Earn (PAYE)Relevant State Internal Revenue Service (SIRS)
5Value Added Tax (VAT)This is a transaction tax and applies only whenever a sales transaction of an item not exempted from VAT occurs. It is not a tax in the real sense but a way of acting as a free tax-collecting agent on behalf of the Federal Government. It is presently a flat rate of 7.5% on sales of items not exempted from VAT.Federal Inland Revenue Service (FIRS)
6Withholding Taxes (WHT)This is also a transaction tax and only applies whenever some payment transactions occur. Such payment transactions are specifically listed in the tax law. Aside from payment transactions specifically listed for withholding tax deduction, the most important guiding principle is that, once such payment is for transactions outside the normal business activities of a company, such payment will be subjected to Withholding Tax. The tax rate is multiple depending on the payment types and whether the payment is made by an individual or by a company. Like VAT, withholding tax is really not a tax but rather a means of acting as a free agent to the Federal Government for collection purposes and remit accordingly.It will be the Federal Inland Revenue Service (FIRS) if the transaction involves the Company. But State Internal Revenue Service will be in charge if the transaction involves an Individual.
7Capital Gain Tax (CGT)

This is also another type of transaction tax. It is only applicable during sales transactions of one’s PROPERTY (usually called Chargeable Assets).  Expenses for improving the asset before disposal or marketing purposes are allowed to be deducted from such sales proceed before arriving at any Gain or not. Any Gains arising from sales of such property are subjected to Capital Gain Tax (CGT). However, some Gains are exempted from CGT (for example, Gains on disposal of replaced assets). A flat rate of 10% is applicable. The due date for filing the return and payment of the tax is the same as in Companies Income Tax

It will be the Federal Inland Revenue Service (FIRS) if the transaction involves Companies. But the State Internal Revenue Service will be in charge if the transaction involves Individuals.
8Transfer Pricing (TP) Obligation

TP is not a tax but rather mere paperwork compliance. Where connected parties are involved in one or more transactions with a company in Nigeria, compliance with Transfer Pricing Law is required. Connected parties are circumstances where we have:

(1) Transaction between Foreign company and its Permanent Establishment (PE) in Nigeria

(2) Companies who are members of the same Group

(3) Companies with common Directors and Shareholders. The Obligation here is to maintain TP documentation and be ready at all times to be provided to FIRS upon request. TP Documentation are justification that the transactions were conducted and priced at arms’ length by ensuring the price or value of the transactions with the connected party reflects open market price (arm’s length price) otherwise if the FIRS thinks otherwise, it will lead to additional tax liability. We demonstrate justification of fair prices by benchmarking the transaction price with any connected party with the open market prices. The Open Market Price can be determined by many methods like (1) Comparable Uncontrolled Price method (CUP)

(2) Cost Plus Method (CPM)

(3) Resale Price Method (RPM)

(4) Transactional Net Margin Method (TNMM) (5) Profit Split Method (PSM) etc. We use a document called TP POLICY to specify and outline the preferred method used by the company and be ready to provide FIRS with such documents once requested.

Federal Inland Revenue Service (FIRS)
9Country by Country Reporting (CbCR)CbCR is not a tax but rather a Notification Obligation and paperwork to FIRS where Multi-National Entities (MNEs) are involved (that is, if your company is a subsidiary of a multinational group or if you are the headquarters in Nigeria with subsidiaries in other countries). (1) The Subsidiary of foreign MNEs must notify the FIRS of the identity and tax residence of the entity making the CbCR disclosure on behalf of the group. This notification is expected to be filed no later than the last day of the group’s accounting year. Nigerian subsidiaries will not be required to file a CbCR directly with the FIRS (2) For Nigeria’s headquarters with foreign subsidiaries, Compliance is only applicable for MNEs with consolidated group revenues of ₦160 billion and above. The obligation is to prepare and file CbCRs Report with the FIRS annually. This is to be done no later than 12 months after the group’s accounting year end. The CbCRs Report summarizes the global financial and tax information of all members of the group to the Federal Inland Revenue Service (FIRS)Federal Inland Revenue Service (FIRS)

*IMPORTANT NOTE: Profit used here is adjusted profit for tax purposes.  That is, adjustment of Profit reported in the Audited Financial Statement (AFS) for allowable and disallowable income and expenses and also the inclusion of some tax reliefs (if any).

 

In Nigeria, intellectual properties can broadly be explained under two categories:

  • Industrial Property: This includes patents, trademarks, industrial designs, and geographical indications.
  • Copyright: This includes literary works (such as novels, poems, and plays), films, music, artistic works (e.g. drawings, paintings, photographs, and sculptures), and architectural design.

PATENT: The law of patents protects inventions, products, and processes that contribute in some practical and functional way to existing knowledge. The law of industrial design protects shapes, patterns, ornaments, or other features, which enhance the outward or aesthetic appearance of a product.

TRADEMARK: A trademark protects the owner of the mark by preserving the exclusive right to use it to identify goods or services, or to authorize another to use it in return for payment. The period of protection varies, but a trademark can be renewed indefinitely beyond the time limit on payment of additional fees. Trademark protection is enforced by the courts, which in most systems have the authority to block trademark infringement.

COPYRIGHT: Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recordings, and broadcasters in their radio and television programs. The system enables people with skill and enterprise to produce and market goods and services in the fairest possible conditions, thereby facilitating trade.

The relevant federal government agency responsible for the protection of intellectual property in Nigeria is the MINISTRY OF TRADE, INDUSTRY AND INVESTMENT

 

SOME KEY TIMELINES 
Incorporation Certificate

within 48 hours if an application is done through NIPC platform.

Within one week if done directly with the Company Registry (CAC)

FIRS and TIN RegistrationThis automatically comes with the  Incorporation Certificate. However, where it does not come, we can get this within two days maximum from the date of application
Opening Bank Accountwithin a week depending on the provision of required documents
FORM M/PAARWithin 24-48 hours
SONCARP Certificatewithin 3 to 7 working days depending on the Accredited Firm used
SONCARP Certificatewithin 4 working days depending on the Accredited Firm used
NAFDAC Permitwithin 90 days for food and 120 days for Pharmaceutical Drugs from the date of application

 

London: OIS Services, 56-57 Fleet Street, London EC4Y 1JU, UK
Opening times: Monday to Friday (10am – 4pm)
30 pounds enrolment fee. (Card payment only.)
Tel: +44 (0) 20 7832 0001

Leicester: OIS Services, St Georges House,

6 St Georges Way, Leicester LE1 1SH, UK
Opening Times: Monday to Friday (9:00am – 12:pm, 2:00pm – 4:00pm)
30 pounds enrolment fee. (Card payment only.)
Tel: +44 (0) 20 7832 0001

Beirut: OIS Services, Jnah-Beirut Opposite Rafik Hariri University Hospital

Mais 6 Building- 3Rd Floor
P.O.Box 9 UNESCO
Opening Times: 9am-4pm
Enrollement fee:$45 or 68000 Lebanese Pounds
Help Desk: infobeirut@oisservices.com
Tel: 009611845138

Washington: OIS, Washington DMV, 11900 Parklawn Drive, Suite 160,

Rockville, MD, 20852.
Opening times: Monday to Friday (9:00am – 4:00pm)
$45 enrolment fee. Payment method: Credit or Debit Card
Tel: +1 301-231-7000

 Dubai: OIS SERVICES, 22A (22nd floor), Silver Tower, Cluster I,

Jumeirah Lake Towers, Dubai, U.A.E.
Opening times: Sunday to Thursday (9:00am – 4:00pm)
180 AED enrolment fee.
Tel: +971 4 276 5448 

Johannesburg: OIS SERVICES, 6 Bolton Road Parkwood Rosebank, 2193.

Johannesburg, South Africa (SA).
Opening times: Monday to Friday (9am – 4pm)
R615 enrolment fee. Payment method: Point-of-Sale
Tel: +27 112682376; +27 112682470

Beijing: OIS SERVICES, Unit 1 Suite 1801, Kun Sha Building,

16 Xin Yuan Li Str, Chaoyang District, Beijing PRC
Opening times: Monday to Friday (9am – 4pm)
RMB300 enrolment fee.
Tel: +86-1084004549

Guangzhou: OIS SERVICES, Unit 27/28, 41st Floor, R&F To-Win Building,

30 Huaxia Rd, Tianhe District, Guangzhou PRC
Opening times: Monday to Friday (9am – 4pm)
RMB300 enrolment fee.
Tel: +862089196634

Atlanta: OIS Services, Suite 204, 918 Holcomb bridge road,

Roswell, Atlanta, GA 30076
Opening times: Monday to Friday (9:00am – 4:00pm)
$45 enrolment fee. Payment method: Credit or Debit Card,

Money order in favour of Online Integrated Solutions Inc.
Tel: +1 404 695 6373 

Houston: OIS Services, Suite 745, 9894 Bissonnet Street,

Houston, TX 77036
Opening times: Monday to Friday (9:00am – 4:00pm)
$45 enrolment fee. Payment method: Credit or Debit Card only.
Tel: +1 713-771-1871

Mumbai (Maharashtra): OIS Visa Services, Quest Offices Pvt. Ltd.,
8th Floor, Parinee Crescenzo,
C38 & 39, G Block, Bandra
Kurla Complex, Bandra (East) Pin:400051, Maharashtra, India.
Opening times: Monday to Friday (10:00am – 12:30pm & 2:00pm – 4:00pm)
Rs.3600 enrolment fee.
Tel: +91 22 48800743

New Delhi: OIS Visa Services, C/O Central Board of Irrigation & Power

Plot No. 4, Ground Floor, Institutional Area Opp. Sarvodaya School Malcha Marg,

Chanakyapuri New Delhi, India.
Opening times: Monday to Friday (10:00am – 12:30pm & 2:00pm – 4:00pm)
Rs.3600 enrolment fee.
Tel: +91 11-4721 9050, +91 8800530119 

Rome: Online Integrated Solutions S.R.L., Via Sicilia, 30 00187 Rome, Italy
Opening times: Monday to Friday (10am – 4pm)
€40 enrolment fee. Payment method: Credit or Debit card only

 Los Angeles: OIS Services, Suite 718, 5757 West Century Blvd,

Los Angeles, CA 90045.
Opening times: Monday to Friday (9:00am – 4:00pm)
$45 enrolment fee. Payment method: Credit or Debit Card
Tel: +1 301 231 7000

New York: 370 Lexington Ave, Suite 613 New York, NY 10017.
Opening times: Monday to Friday (9:00am – 4:00pm)
$45 enrolment fee. Payment method: Credit or Debit Card
Tel: +1 917 900 1114. 

Chicago: 4001 W Devon Ave STE 509 Chicago, IL 60646.
Opening times: Monday to Friday (9:00am – 4:00pm)
$45 enrolment fee. Payment method: Credit or Debit Card
Tel: +1 773 733 4600.

Paris: 9 RUE PAUL VALERY 75116 PARIS FRANCE
Opening times: Monday to Friday (9:00am – 12:30pm and 1:30pm – 4:00pm)
€40 enrolment fee. Payment method: Cash
Tel: 0183927781

Kuala Lumpur: 36.01 Level 36 Menara Citibank,

165 Jalan Ampang 50450 Kuala Lumpur, Malaysia
Opening times: Monday to Friday (9:00am – 12:00pm and 1:00pm – 5:00pm)
RM200 enrolment fee.
Tel: +60321697000, +60321697003

The Hague: First Floor, Regus Building, Koningin Juliana

Plein 10. Postcode 2595AA, The Hague Central station, Netherlands.
Opening times: Monday to Friday (9:00am – 12:30pm and 1:30pm – 4:00pm)
€40 enrolment fee.
Tel: 0031708915324 

Ankara: OIS Services Danismanlik Ltd. Buyukesat Mahallesi,

Ugur Mumcu’nun Sokagi, Konak Apt. No: 49/3 Cankaya/Ankara.
Opening times: Monday to Friday (9:00am – 12:30pm and 2:00pm – 4:00pm)
670 Turkish Lira enrolment fee.
Tel: 00903124382175, 00903124382176

The Hague: OIS Services First Floor, Regus Building, Koningin Juliana

Plein 10. Postcode 2595AA, The Hague Central station, Netherlands.
€40 enrolment fee.
Opening times: Monday to Friday (9am to 5pm)
Email: infothehague@oisservices.com
Telephone no: 0031708915324

Cairo: OIS Services, Building 51, Mitchel Bakhoum Street, Dokki
Opening Times: Sunday to Thursday (10am – 5pm)
E£ 1,500 enrolment fee. (Cash & Card payment)
Tel: +20 237 627 293 or +20 237 627 294 

Ottawa: OIS Services, 396 Cooper str, Suite 202, Ottawa, Ontario, K2P 0G8.
Opening Times: Sunday to Thursday (10am – 5pm)
$67.80 enrollment fee. (Money order payable to Online Integrated Services Ltd only.)
Tel: +1-613-663-1120

YOU MAY CONTACT US FOR MORE GUIDE WHERE YOU ARE UNABLE TO FIND SUITABLE LOCATION

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