The Nigerian Investment Promotion Commission Act (“NIPC Act”) governs foreign investment in Nigeria.
The Nigerian Investment Promotion Commission (“NIPC”) has been established a one-stop to facilitating the registration of foreign investments.
All Nigerian companies with foreign equity participation must register with the NIPC and obtain a certificate of business registration before carrying on business in Nigeria.
registration / licensing requirements
non-industry specific registrations /
The following general non-industry specific registrations / licences may also be required:
|Federal Minister of the Interior||In terms of the Immigration Act, a non-citizen of Nigeria shall not establish a business or register a company without the consent of the Federal Minister of the Interior. In practice, the consent is obtained by the company, after its incorporation, in the form of a business permit issued by the Federal Ministry of the Interior.
An expatriate quota, granting an allocated number of work permits depending on the nature and size of business, is also to be applied for by an investor if non-Nigerians are to be employed by the company.
|Federal Inland Revenue Service (“FIRS”)|
All taxpayers are required to register with FIRS for purposes of corporate income tax and value-added tax (“VAT”), as well as with the relevant State Board of Inland Revenue Service in each of the states where the company has staff, for employees’ tax purposes.
|pension fund administrator|
In terms of the Pension Reform Act, private sector employers with 15 or more employees must establish a contributory pension scheme for the benefit of their employees.
The employee must notify its employer of the pension fund administrator chosen and the identity of the retirement savings account opened for the receipt of relevant pension contributions.
|Management Board of the Nigeria Social Insurance Trust Fund (“NSITF”)|
In terms of the Employees Compensation Act, all employers are required to register for the Employees’ Compensation Scheme administered by the NSITF Management Board, which provides for compensation for injuries sustained in the work place or occupational diseases contracted in the course of employment.
|Industrial Training Fund (“ITF”)|
Employers with five or more employees, or a turnover of at least NGN50-million, are liable to make contributions under the ITF.
Although there is no specific legal requirement for registration under the ITF Act, in practice, employers should register in order to file requisite returns and make payments to the ITF.
|National Housing Fund (“NHF”)|
The National Housing Fund Act establishes a NHF to which every Nigerian citizen earning an income of at least NGN3 000 must make a contribution through deductions by their employers.
Although there is no specific legal requirement for registration under this Act, in practice, employers should register in order to make payments to the NHF.
|National Office for Technology Acquisition and Promotion (“NOTAP”)|
Approval from NOTAP is required for any cross-border contract or agreement in respect of the use of intellectual property, the supply of technical expertise, machinery and plant, operating staff or managerial assistance and the training of personnel. NOTAP registration certificates are required to remit foreign exchange payments through official channels to beneficiaries outside Nigeria.
Relevant contracts must be registered with NOTAP within 30 days from the effective date of such contract.
Industry-specific licences may also be required.
- a rural investment allowance available to companies incurring capital expenditure in providing specified infrastructural facilities for the purposes of a trade or business located at least 20 kilometres away from government-supplied infrastructural facilities;
- a three year tax holiday (with a possible two year extension) available to pioneer companies rendering services classified to be of importance to the economic development of the country, or engaged in the production of a broad range of products in specified sectors, including agriculture, mining, manufacturing, food processing and preservation, deep-sea fishing and printing.
- various incentives available to exporters, including entities operating in export processing zones, companies engaged in research and development activities and the agricultural sector;
- a three year tax holiday available to new companies engaged in the mining of solid minerals;
- various incentives available to companies engaged in downstream gas utilization operations; and
- an exemption from interest receivable by a bank from loans granted to an agricultural trade or business, the fabrication of any local plant and machinery, or as working capital for a cottage industry.
exchange control regulation
Nigeria applies strict exchange control rules in terms of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act.
In theory, all eligible foreign exchange transactions supported by appropriate documentation qualify for purchase and remittance of foreign exchange through an ‘Authorised Dealer’ – usually any of the commercial banks in Nigeria, with the exception of those included in the extensive list of items “Not Valid for Foreign Exchange” as per a 2015 Central Bank of Nigeria circular.
A certificate of capital importation must be obtained promptly from a commercial bank as statutory evidence of capital importation, which is a prerequisite for the repatriation of dividends, interest, profits and capital in the event of dissolution of a company.
Also, refer to the requirement to register certain agreements with NOTAP above.
types of entities available for foreign investment
Where a foreign company wishes to carry on business in Nigeria, it must set up a separate legal entity. The concept of a registered branch of a foreign company does not exist under Nigerian law.
- Limited liability company (public or private);
- company with unlimited liability;
- company limited by guarantee; and