2. Tax Identification Number (TIN) and Value Added Tax Registration (VAT) Registration
After incorporation, it is necessary that the company obtain a TIN. This registration is done at the Federal Inland Revenue Service (FIRS). This is the number that the company will use for the payment of corporate tax and other taxes, as well as to register for VAT.
3. Registration with the Nigerian Investment Promotion Commission (NIPC)
The goal of the NIPC is to promote, encourage and coordinate all investments in Nigeria. Over the years, the Federal Government of Nigeria has tasked the investment promotion agency with attracting Foreign Direct Investment (FDI). Section 17 and Section 20 of the NIPC Act provide for the participation and registration of enterprises envisaged to commence foreign participation in Nigerian businesses.
Section 17 of the NIPC Act provides thus:
‘Except as provided in section 18 of this Act and subject to this Act, a non-Nigerian may invest and participate in the operation of any enterprise in Nigeria.’
Section 20 of the Act provided as follows
‘An enterprise in which foreign participation is permitted under section 17 of this Act shall, before commencing business, apply to the Commission for registration.’
The benefits of registering with the NIPC are numerous for investors. One of the notable benefits is that the Nigerian Investment Promotion Commission Act guarantees that no foreign-owned enterprise or establishment, shall be expropriated or nationalized by any government in Nigeria, after proper registration with the NIPC.
4. Nigerian Immigration Laws
Any investor interested in doing business in Nigeria should be abreast with the necessary information about the laws regulating immigration to the country, and the transfer of foreign workers from another country. The Nigerian Immigration Service, in collaboration with the Nigerian Ministry of Interior, handle foreigners’ immigration requirements.
Foreign investors and offshore companies doing business or looking to establish in Nigeria, must obtain an Expatriate Quota from the Minister of Interior as part of regulatory requirements. Immigrant workers must obtain residence permits that allow them to work in Nigeria and, if necessary, remit their salaries abroad. In addition, a foreigner who wholly owns a company in Nigeria must obtain a Business Permit in order to conduct business in Nigeria.
5. Obtaining Sector-Specific Licenses and Permits
A foreign company must inquire about the licenses required to conduct business in the proposed industry sector. Some industries may have special licensing requirements that operators must obtain before the commencement of business in Nigeria. For instance, a foreign company interested in establishing a sports betting company in Nigeria must first obtain a permit from the National Lottery Regulatory Commission (NLRC). Any company that is established to provide logistics services must be licensed by the Nigerian Postal Service (NIPOST), a company that is involved in energy services (such as generation, transmission and distribution of electricity), must obtain licenses and permits from the Nigerian Electricity Regulatory Commission (NERC).
Incentives Available to Foreign Investors
Upon registration, certain benefits can be explored by foreign-owned enterprises in Nigeria. The provision of Section 22 of the NIPC Act empowers the NIPC to consult with other government agencies to negotiate incentives for special investment. Section 22 of the NIPC Act in this regard, provides thus;
‘For the purpose of promoting identified strategic or major investment, the Commission shall, in consultation with appropriate Government agencies, negotiate specific incentive packages for the promotion of investment as the Commission may specify’
The incentives available to foreign investors includes:
1. Pioneer Status Incentive (PSI)
The Pioneer Status Incentive is a tax break that exempts qualifying industries and products from paying corporate income tax for three years, with the option to extend it for one or two more years.
PSI is an incentive formulated to promote Foreign Direct Investment (FDI) in Nigeria. Pioneer status is a tax incentive that exempts companies acknowledged as ‘pioneers’ in certain industries from paying company income tax during their early years of development, granting the companies an opportunity to make a significant profit to reinvest back into the business.
For a company to be eligible for PSI, the business which the company is involved in, must be part of the industries approved as a pioneer industry by the Federal Executive Council (FEC). Some of the approved pioneer industries are; Agriculture, mining and quarrying, information and communications, manufacturing, electricity and gas supply, construction, etc.
2. Capital Importation and Repatriation
Capital importation refers to the importation of foreign currency into Nigeria in the form of cash or other products (natural resources, tools and devices).
Foreigners are allowed to bring any recognized foreign currency into Nigeria to fund their investment, subject to money laundering restrictions. These funds must be brought in through a licensed dealer. Foreign investors must first obtain a Certificate of Capital Importation (CCI) from the licensed dealer (usually a commercial bank), to effectively bring in foreign currency to fund their investment. A CCI is also required when capital is not imported in the form of cash but rather in the form of other products.
Foreign investors are free to repatriate all profits and dividends net of taxes through an authorized dealer, in freely convertible currency under the provisions of the Foreign Exchange (Monitoring & Miscellaneous Provision Act No. 17 of 1995).
3. Duty Drawback Scheme
The Duty Drawback Scheme reimburses duties/surcharges on raw materials, including packing and packaging materials, used in the manufacture of products upon effective exportation of the finished products. The new Duty Drawback Scheme will provide automatic refunds (60%) upon initial screening by the Duty Drawback Committee, and presentation of a bond from a recognized bank, insurance company or other financial institution.
The Bond will pay for 60% of the refund due to the exporter. The Duty Drawback Committee shall grant any balance where applicable, or request refunds for any overpayment made at the conclusion of the processing of exporters’ claims.