Nigeria Investment Hub

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Is there a limit to foreign participation in an enterprise in Nigeria?

Foreigners may own up to 100% of any Nigerian business (S17) except in the Maritime sector (Cabotage).

What is the procedure for repatriation of capital and profit?
Under the provisions of the Foreign Exchange (Monitoring & Miscellaneous Provision Act No. 17 of 1995) , foreign investors are free to repatriate their profits and dividends net of taxes through an authorized dealer in freely convertible currency.

What are the types of Companies Registered in Nigeria?

  • Private Companies Limited by Shares
  • Public Companies Limited by Shares
  • Companies Limited by Guarantee
  • Unlimited Companies
  • Exemptions are granted to foreign Companies undertaking special project. Companies seeking exemption are to forward their application to the Secretary to the Federal Government of Nigeria.

What are the requirements for the Incorporation of a Company in Nigeria?

  •  Search for availability of name
  • Payment of appropriate stamp duty fee at the Federal Board of Internal Revenue
  • Submission of Memorandum and Articles of Association together with statutory forms for verification and assessment
  • Payment of statutory fees at Corporate Affairs Commission

For further details visit the Corporate Affairs Commission (CAC). Website at www.cac.gov.ng or contact them at:

The Customer Service Unit,
Corporate Affairs Commission,
Plot 565 Ndola Square,
Off Micheal Okpara Street,
Wuse Zone 5, Abuja, Nigeria.

 

What are the requirements for Business Permit?

  1. Formal application letter to Executive Secretary
  2. Minimum Share Capital Requirement – N10million
  3. Duly completed NIPC Form I
  4. Certificate of Incorporation
  5. CAC’s Forms C02 and C07
  6. Memorandum and Articles of Association
  7. Tax Clearance Certificate
  8. Certificate of Capital Importation
  9. Evidence of acquisition of Business Premises (Tenancy or Lease Agreement)
  10. Feasibility Report

Fees
NIPC Form I – N50, 000 (Fifty Thousand Naira)
Collection of Business Permit Certificate – N50, 000 (Fifty Thousand Naira)

 What are the requirements for Expatriate Quota?
In addition to the requirements listed under Business Permit, the following are also required:

  1. Evidence of Acquisition of Operational Premises and Operational Machinery Equipment in the case of Industrial Establishment
  2. Evidence of foreign Capital Importation
  3. Management and Technical Service Agreement (for service Companies)
  4. Tax Clearance
  5. Minimum Authorized Share Capital of Ten Million Naira (N10,000,000)
  6. The Company must produce its project implementation programme
  7. The Company must produce a training programme for Nigerians in addition to management success schedule

 

What approvals/licenses would an investor require to set up an enterprise?
Approvals/licenses are given by the following Agencies depending on the sector to be invested in:

 Oil & Gas Sector
1. Department of Petroleum Resources (DPR) – Oil & Gas
Plot 622, Eket Close
Area 8, Garki,
P.M.B. 399
Tel: 234-9-2349982, 2349988
Website: http://www.dprnigeria.org.ng/

 Food & Drug Manufacture
2. National Agency for Food and Drug Administration and Control (NAFDAC) – Food and Drug Manufacturing
Moshod Abiola Road, Area 2
P.M.B. 5023 Garki, Abuja
Tel: 234-9-2346383, 2346405, 2346402
Website: http://www.nafdac.gov.ng

 

Manufacturing

3. Standards Organisation of Nigeria (SON) – All Manufacturing Sectors
13/14, Victoria Arobieke Street
Off Admiral Way
Northern Business District
Lekki Peninsula, Lagos
Tel: 234-9-2708231-4
Website: http://www.son.gov.ng/

Telecommunication
4. Nigerian Communication Commission – Telecommunication
Plot 423, Aguiyi Ironsi Street
Maitama, Abuja,
Federal Capital Territory.
Tel: +234-9-4617000, Fax: +234-9-4617514
Website: www.ncc.gov.ng

Agriculture
5.Federal Ministry of Agriculture – Agriculture
FCT Secretariat, Area 11
Garki, Abuja
Telephone: 234-9-2341931, 2342331, 2341458

 Environmental Impact Assessment Certification (for all Industries)
6. Ministry of Environment – Manufacturing
Federal Secretariat Complex
(7&9 Floor)
Shehu Shagari Way, Maitama
P.M.B. 468, Garki, Abuja
Tel: 234-9-523431, 5234932, 5234932

Tourism
7. National Tourism Development corporation
Old Federal Secretariat, Area 1
P.M.B 167 – Garki
Abuja.
Tel: 234- 2764,
Fax: 2342775

 Solid Minerals
8. Ministry of Solid Minerals Development
Federal Secretariat Complex,
Shehu Shagari Way, Maitama
P.M.B 107, Garki Abuja
Tel: 234-9-5235830, 5236517

Power & Steel
9. Ministry of Power and Steel
Federal Secretariat Complex,
Shehu Shagari Way, Maitama
P.M.B. 278, Garki, Abuja
Tel: 234-5237064-6

 What is the Companies Income Tax Rate in Nigeria?
30%.

 Which areas (sectors) are closed to investment in Nigeria?
Investors are prohibited from participating in the following business activities: Businesses involved in production of military or paramilitary attire and equipment; or production of narcotic drugs and psychotropic substances (S8).

 What are the incentives available for investing in Nigeria?
There are both general sector specific and incentives. The general incentives include the following:

a. Pioneer Status:
Pioneer status takes the form of five-year tax holiday to qualifying industries anywhere in the federation.

The grant of pioneer status to an industry is aimed at enabling the industry concerned to make a reasonable level of profit within its formative years. The profit so made is expected to be plugged back to facilitate expansion and growth of the industry.

 Requirements for Pioneer Status?

Pioneer Status is conferred on a firm if it falls within the sectors that are defined by the government as priority areas. When a project is conferred with pioneer status, it becomes entitled to a tax holiday of 5 years.

  1.  Formal application letter to Executive Secretary
  2. Minimum Share Capital Requirement – N10million
  3. Duly completed NIPC Form II
  4. Certificate of Incorporation
  5. CAC’s Forms C02 and C07
  6. Memorandum and Articles of Association
  7. Tax Clearance Certificate
  8. Evidence of acquisition of machinery; (Form M)
  9. Evidence of acquisition of Business Premises (Tenancy or Lease
  10. Agreement)
  11. Feasibility Report
  12. Fees
    i.NIPC Form II – N40, 000
    ii.Processing Fees – N100, 000
    iii.Collection of Approval letter – N60, 000
    iv.Application for Extension – free
    v.Approval of Pioneer Status Extension – N50, 000

b. Capital Allowances
The amount of capital allowance to be enjoyed in any year of assessment is restricted in Nigeria to a percentage of assessable profit. The following is a schedule for the sectors:

Tax Allowance Initial % Annual %
Building Expenditure 15 Nil
Industrial Building

Expenditure

15 Nil
Mining 95 Nil
Plant

i. (Agric prod)

ii. Others

95

50

Nil

20

Furniture fittings 25 20
Motor Vehicles

i. Public Transportation

ii. Others

95

50

 

Nil

25

Housing Estate 50 25
Ranching/Plantation 30 50
R & D 95 Nil
Agro

Plants/Equipment

Leased

Addition-al

Invest.

Allowanc 10%

 

Nil
What are the Incentives in the Oil and Gas Sector?

In view of the enormous potentials in this sector, some fiscal incentives have been put in place by the government for investors as follows:

Gas Production Phase

  • Applicable tax rate under the Petroleum Profit Tax (PPT) Act to be at the same rate as company tax currently at 30%.
  • Capital Allowance at the rate of 20% per annum in the first four years, 19% in the fifth year and the remaining 1% in the books.
  • Investment Tax Credit of the current rate of 5%.
  • Royalty at the rate of 7% on shore and 5% offshore.

 

Gas Transmission and Distribution

  • Capital allowance as in production phase above.
  • Tax rate as in production phase.
  • Tax holiday under pioneering status.

LNG Projects

  • Applicable tax rate under PPT is 45%.
  • Capital allowance is 33% per year on straight-line basis in the first three years with 1% remaining in the books.
  • Investment tax credit of 10%.
  • Royalty of 7% on-shore, 5% off-shore tax deductible

 

Gas Exploitation (Upstream Operations)

Fiscal Arrangements are reviewed as follows:

  • All investment necessary to separate oil from gas from the reserves into suitable products is considered part of the oil field development.
  • Capital investment facilities to deliver Associated Gas in usable form at utilization or transfer points will be treated for fiscal purposes as part of the capital investment for oil development.
  • Capital allowances, operating expenses and basis for assessment will be subjected to the provisions of the PPT Act and the revised Memorandum of Understanding (MOU).

 

Gas Utilisation (Downstream Operations)

Incentives given to investors for encouragement of exploitation and utilization of Associated Gas for commercial purposes include:

  • Companies engaged in gas utilization are to be subjected to the provisions of the Companies Income Tax Act (CITA).
  • An initial tax free period of five years.
  • Accelerated Capital Allowance after the tax-free period in the form of 90% with 10% retention in the books for plant and machinery.
  • 15% investment capital allowance which shall not reduce the value of the asset.

In 1998, the government approved additional incentives to support the gas industry in the following areas:

  •  All fiscal incentives under the gas utilization downstream operations in 1997 are to be extended to industrial projects that use gas i.e. power plants, gas to liquids plants, fertilizer plants and gas distribution/transmission plants.
  • Gas is transferred at 0% PPT and 0% Royalty.
  • Interest on loans for gas projects is to be tax deductible provided that prior approval was obtained from the Federal Ministry of Finance before taking the loan.
  • All dividends distributed during the tax holiday shall not be taxed.

 

What are the incentives in the Power Sector?

The Federal Government of Nigeria has set-up several incentives to attract foreign direct investment into the power sector. The incentives include:

  • Tax Holidays of up to 5 years
  • Exemption from Duty Taxes on imported equipment
  • Capital & Investment Allowance which can be carried forward and used after tax holiday period
  • Manufacture of transformers, meters, control panels, switchgears, cables and other electrical related equipment are considered as pioneer products/industries. As a result, there is tax holiday of 5 to 7 years for investors who invest in these areas.
  • Power plants using gas are assessed under the companies income tax act at a reduced rate of 30%
  • 100% foreign ownership of Electricity plants
  • · Repatriation of profit with a 5% withholding tax
  • · Instituting a politically independent, and transparent regulatory agent for the power sector that will effectively enforce the established regulatory framework
  • · Putting in place the necessary foundations e.g. reliable transmission infrastructure that would create a level playing field for efficient private sector participation in the electricity supply
  • · Implementing a transparent and predicated tariff adjustment mechanism that will cover cost of production and provide adequate returns on investment at all times.

What are the incentives in the Agriculture sector?

The government within the past few years has introduced a number of measures designed to promote investment. Some of these measures include:

  1.  Fiscal measures on taxation
  2. Effective protection of local industries with import tariff or outright ban on importation of locally available substitutes;
  3. Export promotion of Nigerian-made products; and
  4. Foreign currency facility for international trade.

Some of the specific incentives are categorized as follows:

i. Export Incentives: Retention of export proceeds in foreign currency:

Exporters of Nigerian commodities are obliged to open a foreign currency domiciliary account (D/A) with an authorized bank of its choice in which 100% of the proceeds of such exports may be credited in foreign currency.

ii. Export Development Fund (EDF)

The Export Development Fund (EDF) is a special fund set up by the government to provide financial assistance to private sector exporting companies to off-set part of their initial expenses in respect of certain export promotion activities. These are promotional activities and the conditions for eligibility are as outlined by the Nigerian Export Promotion Council (NEPC).

 

iii. Export Adjustment Fund Scheme:

This scheme serves as supplementary export subsidy to compensate exporters for the high cost of local production arising mainly from infrastruactural deficiencies and also other natural and negative factors beyond the control of the exporter.

 

iv. Tax and Other Incentives:

  •  Export oriented industries:
    Export oriented industries that export not less than 60% of their product can enjoy 10 percent tax concession for five years.
  • Excise duty:
    In order to boost local industries, stimulate trade and reduce cost, government abolished most excise duties since 1st January 1998.
  •  Capital Assets Depreciation Allowance:
    The Law in Nigeria provides an additional annual depreciation allowance of 50% on plant and machinery to manufacturing exporters who exports at least 50% of the value of their annual turnover provided that the product has at least 40% local raw materials content or 35% value added.
  •  Pioneer Status:
    The provision of the Industrial Development (Income Tax Relief) Act with respect to Pioneer Status tax holidays applied to any manufacturing exporter who exports at least 50% of his annual turnover.
  •  Companies with small or no profits in Agro allied business are exempted from paying minimum tax of 20%

 

What are the Incentives in the Telecommunications Sector?

  • Good tariff structure, which ensures that investors recover their investment over a reasonable period of time.
  • Import duty on all telecoms equipment reduced from 25% to 5%.
  • Measures on speedy clearance of goods at the ports
  • Exclusivity period for licences, e.g. 5 years for the GSM licences, 3 years for long distance international gateway operators.
  • Pioneer status for five years (under industrial Development (Income Tax Relief) Act 1990) is offered to interested investors who want to set plants for the manufacture of telecoms equipment in the country

 

What are the Incentives in the Solid Minerals Sector?

In order to encourage investments in the sector Government has put in place the following incentives;

  •  Three to five years tax holiday for new mining companies, and a system of deferred royalty payment that is determined by the level of the investment and the strategic nature of the project. Also possible is capitalization of expenditure on exploration and surveys;
  • Companies profits tax reduction from 30% to 20%;
  • Roll-over relief from Capital Gains Tax.
  • Capital Allowance of 95% for Mining companies replacing their Plant and Equipment and 75% for companies with Mining Lease.
  • Extension of infrastructure such as roads and electricity to mining sites;
  • Provision of 100% foreign ownership of mining companies or concerns;
  • Tax Relief on Interest Income: Interest accruing from loans granted by banks in aid of export activities enjoys favourable tax treatment.
  • Capital Assets Depreciation Allowance: The law in Nigeria provides an additional annual depreciation allowance of 5% on plants and machinery to manufacturing exporters who export at least 50% of their annual turnover provided that the product has at least 40% local raw material content or 35% value added;

 

What are the incentives in the Free Trade Zones

Locating in any Free Trade zone in Nigeria automatically confers on the investor, certain locational advantages as well as very generous incentives. These include:

  •  Relative proximity to major markets of Africa, Europe and America.
  • Large domestic market for the 25% of production that FTZ producers can sell in the Customs Territory.
  • Favourable quotas on certain products from Nigeria export to the European Union (EU) and the United States.
  • Made in Nigeria products enjoy preferential tariffs concessions in EU.
  • Abundant supply of skilled labour at very competitive rates;

In addition to the above, the Nigeria EPZ’s regulatory regime is liberal and provides a conducive environment for profitable operations. The incentives available are among the most attractive in Africa and compares favourably with those in other parts of the world. These include:

a. Exemption from all Federal, State and Local Government taxes, levies and rates

b. Approved enterprises shall be entitled to import into a Zone, free of customs duty on capital goods, consumer goods, raw materials, components and articles intended to be used for purposes of and in connection with an approved activity.

c. Freedom from legislative provision pertaining to taxes, levies. Duties and foreign exchange regulations.

d. Repatriation of foreign capital on investment in the zone at any time with capital appreciation of the investment.

e. 100% foreign or local ownership of factory allowable

f. One stop approvals, (factory management deals with only the management of the zone) which grant all licenses whether or not the business is incorporated in the Customs territory

g. Unrestricted remittance of profits earned by investors

h. Permission to sell 100% of total production in the domestic market

i. No import or export license

j. Rent free land at construction stage, thereafter rent shall be as determined by the management of the zone. Foreign manager and qualified personnel may be employed by companies operating in the Zones

k. Operations within a zone shall commence on the date when the constructions of the perimeter fence and gate have been completed and the Authority has declared it so.

 

Where else could one get information about Nigeria Nigeria’s economic data?

Nigeria has an embassy or High Commission in most countries of the world. Please visit the Nigerian Embassy or High Commission in your country. For online information on Nigeria’s economic data, please visitwww.cenbank.org, www.fmf.gov.ng or www.

 

What other Agencies are involved in the investment process in Nigeria?

The foremost investment Agency in Nigeria is the Nigerian Investment Promotion Commission (NIPC). The Commission however collaborates with other agencies to facilitate investment in Nigeria. Among these are:

  • Corporate Affairs Commission

565 Ndola Sq off Micheal Okpara Street
Wuse, Zone 5
P. M. B. 198
Tel: 234-9-5241016, 5241046-50
Fax: 234-9-521017
Website: www.cac.gov.org

 

  • Nigerian Export Promotion Council

Block 312, Kumba Street,
P.M.B. 133
Tel: 234-9-5230980, 5230932, 5230933, 5230981
Fax: 234-9-2340931
Website: www.nigxport.org

 

  • Nigerian Export Processing Zones Authority

Shehu Shagari Way
Abuja
Tel: 234-9-234060, 2343062
Fax: 234-9-2343061, 2343063

 

  • Federal Ministry of Foreign Affairs

Maputo Street, Wuse Zone 3
P.M.B.130, Garki, Abuja
Tel: 234-9-523049, 5230185-6, 5230490

  •   Federal Ministry of Commerce

Old Federal Secretariat Complex
Area 1, P.M.B. 88
Garki, Abuja
Tel: 234-9-2341687, 2341687, 2341490, 2348454, 2341484

 

  • Federal Ministry of Internal Affairs

Old Federal Secretariat Complex,
Area 1, P.M.B. 7007,
Garki, Abuja
Tel: 234-9-2341934-5, 2342426

 

  • Federal Ministry of Finance

Federal Ministry of Finance Building,
Ahmadu Bello Way, Central Business District
P. M. B. 14, GArki, Abuja
Tel: 234-9-2346932, 2346928, 2346286, 2346289
Website: www.fmf.gov.ng

 

  • Federal Ministry of Industry
    Old Federal Secretariat, Area 1
    P.M.B. 85Garki, Abuja
    Tel: 234-9-2341690

 

  • National Tourism Development Corporation

Old Federal Secretariat, Area 1
P.M.B.167
Garki, Abuja

Which is the Agency responsible for privatization in Nigeria?

The Agency which is the secretariat for the National Council on Privatisation is located at

No.1, Osun Crescent, Off IBB Way
Maitama, Abuja
Tel: 234-9-5235256
Website: www.bpeng.org


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