Thread by @savndaniel

SO YOU WANT TO DO BUSINESS IN NIGERIA?

Business setup and operation in Nigeria are governed by various laws, and they include but are not limited to:

The Companies and Allied Matters Act (CAMA) (This is the primary law that governs companies' formation and maintenance in Nigeria)

Companies Income Tax Act

Value Added Tax Act

Withholding tax Act

Nigerian Investment Promotion Commission Act

Labour Act

Immigration Act

Immigration Regulations 2017

Employee Compensation Act

Banks and other Financial Institutions Act

BUSINESS REGISTRATION IN NIGERIA

A company registration is the first important step required for doing business in Nigeria. Under the Nigerian law (CAMA).

- Only a company duly registered in Nigeria can engage in any business within Nigeria.

- The government agency in charge of the company formation is the Corporate Affairs Commission (CAC).

THE FIRST STEP TOWARDS A BUSINESS REGISTRATION IS TO:

- Conduct a search for the intended name of the business in order to have the name reserved.

- The applicant will submit two intended names for registration.

- CAC will, in turn, use the names provided to search through its database in order to make sure that the name is not already in use by another business or that the name is not similar to any other business name.

- Any individual or corporate entity, either resident or non-resident in Nigeria can be a member of a company.

- Minimum of 2 persons or entities are required to form a company any company in Nigeria & a minimum of2 individuals are required to be first directors of a company.

- Where at an annual general meeting there is no appointment or reappointment of an auditor then the directors of the company may appoint someone to fill the vacancy.

- Where the directors exercise this power, then the company is entitled to

give notice to the Corporate Affairs Commission (CAC) within one week of the power becoming exercisable.

REGISTRATION WITH THE NIPC

The Nigerian Investment Promotion Commission (NIPC) is the body in charge of promoting, coordinating and monitoring investments in Nigeria. This

body is established by the Nigerian Investment Promotion Commission Act. The functions to the commission include:

bethe agency of the Federal Government to co-ordinate and monitor all investment promotion activities to which this Act applies;

initiateand support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors;

promoteinvestments in and outside Nigeria through effective promotional means;

collect, collate, analyse and disseminate information about

investment opportunities and sources of investment capital

registerand keep records of all enterprises to which this Act applies;

identifyspecific projects and invite interested investors for participation in those projects;

initiate, organize and participate in promotional activities, such as exhibitions, conferences and seminars for the stimulation of investments;

provideand disseminate up-to-date information on incentives available to investors;

assistincoming and existing investors by providing support services;

evaluate the impact of the Commission on investments in Nigeria and make appropriate recommendations

Advise the Federal Government on policy matters, including fiscal measures designed to promote the

industrialisation of Nigeria or the general development of the economy.

The major advantage of NIPC registration is that the agency process application for tax incentives known as pioneer status for deserving companies.

TAXES APPLICABLE TO COMPANIES

Some of the applicable taxes for a company operating in Nigeria include the followings:

Company Income Tax: This is the tax is levied on the income of the business. Company income tax is charged at 30% of the profit earned by the company

after all allowable deductions for a company with more than N100 Million Naira annual turnover. The tax is charged at 20% for a company with a turnover between N25 Million and N100 Million.

Value Added Tax (VAT): It is payable by the customer and is imposed on the

supply of goods and services. The VAT is currently charged at 7.5%.

Stamp Duties: This is a tax payable on instruments. The rate of this tax is dependent on the document and the value of the transaction on the face of it. It is usually charged at a fixed rate and ad valorem.

Capital Gains Tax: This is 10% tax imposed on capital arising from sales, exchange or any other dispositions of properties. It is charged to the chargeable assets of a business. It is triggered when an asset is sold.

Withholding Tax: The withholding tax is usually charged at the rate of 10% to 5% of the payable sum, depending on the type of payments. The withholding tax is normally deducted at source when payment is to be made to the beneficiary. It is an advance payment of income tax.

Industrial Training Fund: The tax is charged at 1% of the company employees' payroll. It is only applicable to a company with a minimum of 50 Million Naira turnover or having more than 5 employees.

National Social Insurance Trust Fund (NSITF): The NSITF is also charged at the rate of 1% of the company employees' payroll. The NSITF payment is not actually a tax, but a form of mandatory insurance for the employees of all companies operating in Nigeria.

Education Tax Fund: This tax is applicable to all companies operating in Nigeria. It is levied at 2% on the profits of companies operating in Nigeria.

Petroleum Profits Tax: This tax is applicable to only companies engaging in the exploration and production of

crude oil. It is charged at the rate between 50% to 85% of ascertained profits after deductions of all operational expenses.

The duty of collecting tax is vested in the 3 arms of government. The Federal Inland Revenue Service (FIRS) is the body in charge of the taxes payable to

the Federal Government. The taxes payable to the state government is paid to the State Boards of Internal Revenue (SNIR). The Local Government also administers some levies, which they collect through across various councils within Nigeria.

APPOINTMENT OF AUDITORS

According to CAMA, every company is expected to appoint an auditor or auditors at its annual general meeting to audit the financial statements of the company. The first auditors of a company may be appointed by the directors at any time before the

company is entitled to commence business and auditors so appointed shall hold office until the conclusion of the next annual general meeting.

The appointment of subsequent auditors is done by the passing a resolution. The auditors hold office for one year as CAMA provides

that the appointment of auditors is done at every annual general meeting. However, a retiring auditor can be reappointed to continue in the role as the auditor to the company.

Where at an annual general meeting there is no appointment or reappointment of an auditor then the

directors of the company may appoint someone to fill the vacancy. Where the directors exercise this power, then the company is entitled to give notice to the Corporate Affairs Commission (CAC) within one week of the power becoming exercisable.

REGISTRATION WITH THE NIPC

The Nigerian Investment Promotion Commission (NIPC) is the body in charge of promoting, coordinating and monitoring investments in Nigeria. This body is established by the Nigerian Investment Promotion Commission Act.

THE FUNCTIONS TO THE COMMISSION INCLUDE:

bethe agency of the Federal Government to co-ordinate and monitor all investment promotion activities to which this Act applies;

initiateand support measures which shall enhance the investment climate in

Nigeria for both Nigerian and non-Nigerian investors;

promoteinvestments in and outside Nigeria through effective promotional means;

collect, collate, analyse and disseminate information about investment opportunities and sources of investment capital

registerand keep records of all enterprises to which this Act applies;

identifyspecific projects and invite interested investors for participation in those projects;

initiate, organize and participate in promotional activities, such as

exhibitions, conferences and seminars for the stimulation of investments;

provideand disseminate up-to-date information on incentives available to investors;

assistincoming and existing investors by providing support services;

evaluate the impact of the Commission on investments in Nigeria and make appropriate recommendations

Advise the Federal Government on policy matters, including fiscal measures designed to promote the industrialisation of Nigeria or the general development of the economy.

The major advantage of NIPC registration is that the agency process application for tax incentives known as pioneer status for deserving companies.

EMPLOYMENT OF STAFF

The contracts between employer and employee are usually guided by the Labour Act.

Section 7(1) of the Labour Act requires employers to provide a contract to employees within three months of commencement of the employment relationship. The contract of

employment is meant to contain

The names of both the employer and the employee

The name and address of the employee, the nature of the employment

If the contract is for a fixed term it should also contain the term or date in which it expires,

The wages to be paid to the employee should also be contained in the contract of employment, the terms and conditions relation to hours of work, holidays etc.

Either party to a contract of employment may terminate the contract on the expiration of a notice given by him to

the other party of his intention to do so. The notice to be given is calculated as follows;

one day, where the contract has continued for a period of three months or less;

one week, where the contract has continued for more than three months but less than two years;

two weeks, where the contract has continued for a period of two years but less than five years; and

one month, where the contract has continued for five years or more.

The National Industrial Court is the court which is vested with the jurisdiction to handle employment matters in Nigeria in case of any disputes.
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