Here’s a practical guide from Enterprise Singapore and our partner, Nigeria Investment Promotion Commission (NIPC), on the nuts and bolts of setting up shop in Nigeria.
There are four types of companies recognised for business in Nigeria:
This is the most common form of registered business in Nigeria and it requires a minimum share capital of NGN 10,000 (US$27 or S$37). A private limited liability company is a legal entity in its own right, separate from those who own it.
The company requires a minimum of two and a maximum of fifty shareholders and directors. Such a company is restricted from transferring its shares freely and prohibited from inviting the public to subscribe to its shares, debentures and/or deposit money for fixed periods or payable at call, whether or not bearing interest.
The minimum share capital for this type of company is NGN 500,000 (US$1,350 or S$1,836). A Public Limited Company requires a Memorandum of Understanding between two shareholders. There is no restriction on the maximum number of shareholders or their rights to transfer their shares freely. The public may be invited to subscribe to its capital and the shares may be traded on any securities Exchange.
Generally incorporated as not-for-profit, such company limits its members' liability to the amount of their respective guarantees.
This type of company has no limit on the liability of its members.
Should all requirements be fulfilled and all documents properly submitted, registration can be approved as quickly as within 24- 48 hours.
You can register online via the Corporate Affairs Commission (CAC) Company Registration Portal, where you can complete required forms and fee payments, and submit relevant documents.
The online registration process is laid out below:
Foreign companies may apply for exemption from the standard registration requirements if they are:
Such applications for exemption shall be forwarded to the office of the Secretary to the Government of the Federation (SGF)
There must be a minimum of two directors. Registration process is typically faster if one of the directors is Nigerian, who only needs to hold a small amount of shares. Upon the establishment of the company, directors can be amended.
However, the following industries are exemptions and have their own specific requirements i.e. oil and gas, shipping, broadcasting, advertising, private security, engineering, aviation and pharmacy.
For example, the oil and gas industry is impacted by the Local Content Act, which stipulates that 51% of equity shares must be owned by Nigerians.
No, there are no restrictions.
It is possible for foreign investors to own 100% of the equity of a limited liability company.
Yes, your company can be wholly-owned by foreigners, except for the following industries: oil and gas, shipping, broadcasting, advertising, private security, engineering, aviation and pharmacy. Minimum percentage of local shareholders for the mentioned industries vary.
A minimum of two shareholders are required.
According to Section 54 of the Companies and Allied Matters Act (CAMA) Act 1 of 1990, all foreign companies are required to incorporate a local company in Nigeria before commencing business.
There is no differentiation in business activities that local and foreign companies can pursue, except those stated in the negative list below.
The areas of business prohibited by the negative list includes:
You can apply for licenses after setting up your business.
License renewals depend on your business entity and the type of license required.
If you occupy or intend to occupy a factory, it is mandated to apply for registration to the Director of Factories, who shall issue a certificate of registration if the proposed factory is suitable. Employers are compelled under the Factories Act to protect workers against industrial hazards and display an extract of the Act in their factory premises.
The minimum share capital for foreign-owned companies is NGN 10 million (US$27,000 or S$36,700).
The requirement for "authorized share capital" has since been replaced by "minimum approved share capital" under the newly revised Companies and Allied Matters Act (Repeal and Re-Enactment) Bill 2019. Companies no longer need a court order to change their share capital.
As long as the capital was brought into Nigeria under a Certificate of Capital Importation (CCI), you should not face difficulties repatriating your capital investments.
A CCI is issued by a Nigerian commercial bank to a foreign investor at the time the investor brings in capital into Nigeria. In order to obtain a CCI, the information has to be submitted within 24 hours. Nigeria has since introduced an electronic CCI (e-CCI) system to ease tracking and safe-keeping of CCIs.
No, it is not a must.
With the required documents accurately prepared, your corporate bank account can be opened instantly.
While it varies for banks, some do not require any minimum amount for capital in the bank account and allow for the entire amount in the bank account for use for business activities.
The current corporate income tax (CIT) rate stands at 30%.
For small companies in the manufacturing industry and wholly export-oriented companies with turnover not exceeding NGN 1 million (US$2,700 or S$3,672), the CIT rate is reduced to 20% in the first five years of operation.
Resident companies are liable to CIT on their worldwide income (profits accruing in, derived from, brought into, or received in Nigeria) while non-residents are subject to CIT on the income derived from their Nigerian operations. A non-resident company with a fixed base in Nigeria is taxable on the profits attributable to that fixed based. Any Withholding Tax (WHT) deducted at source from its Nigeria-source income is available as offset against the CIT liability.
A free Taxpayer Identification Number (TIN) is automatically generated after registering the business, and this enables the business to start paying taxes.
Please refer to PwC’s Worldwide Tax Summaries for Nigeria’s corporate tax credits and incentives.
CIT is paid yearly, no later than eight months after the financial year-end. A maximum of three instalments are permitted.
The Withholding Tax Rates (WTR) on interests, dividends and royalties are the same at 10%. Countries with Double Tax Treaties enjoy lower WTR rates at 7.5%.
The period for filing WHT is 21 days after the duty to deduct arose for deductions from companies.
The penalty for failure to deduct or remit tax is 10% of the amount not deducted/remitted.
Note that companies are required to submit, in electronic form, a schedule of all their suppliers for the month showing the tax identification number (TIN), address of the suppliers, the nature of the transaction, WHT deducted, and invoice number.
Nigeria and Singapore have signed an Avoidance of Double Taxation Agreement in August 2017.
Yes, the current VAT rate is 5%.
Yes, you can find the breakdown in the table below.
Yes, they will require a work permit known as the Combined Expatriate Residential Permit and Aliens Card (CERPAC).
Please note all information is provided in good faith for guidance and reference purposes only, and is correct as of June 2019.