By Centurion Law Group


Business entities, processes and requirements.

Business entities

In Nigeria, the main business entities recognized under the Companies and Allied Matters Act, 2020 (as amended) (CAMA), are:

  • Private limited liability companies (Ltd): This type of company:
    • requires a minimum issued share capital of N100,000.
    • requires minimum of one (1) and a maximum of fifty (50) shareholders. 
    • restricts the transfer of its shares 
    • is 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.
  • Public Limited Liability Company (Plc):
    • Minimum issued share capital for this type of company is N2,000,000 with 25% of the share capital allotted to its members at incorporation. 
    • No restriction on the maximum number of shareholders or their right to transfer their shares freely. 
    • It can offer its shares and debentures to the public 
    • Must appoint a Company Secretary who is a professional with requisite experience.
  • Unlimited liability companies (Unltd):
    • No limit on the liability of its members.
    • Its members are like Partners and share the company’s liabilities.
  • Companies limited by guarantee (Gte):
    • Consent of the Attorney General of the Federation must be obtained. 
    • Generally incorporated as a not-for-profit.
    • Allowed to do business not for profit but to apply such towards realising its objects.
    • No share capital. Members merely undertake to contribute the subscribed amount in the event of its winding up, to a sum not less than N100,000 at all times.  
    • Limits its members’ liability to the amount of their respective guarantees. 
  • Limited Liability Partnership and Limited Partnership

While it is mandatory for any foreign company desirous of doing business in Nigeria to get incorporated in Nigeria, a foreign company desirous of doing business in Nigeria may apply to the office of the Secretary to the Government of the Federation (SGF), for exemption from the standard registration requirements. This exemption may be granted if it is:

(a) foreign company other than (d) below, invited by or with the approval of the Federal Government for a specific individual project; 

(b) executing specific individual loan projects on behalf of a donor country or international organisation; 

(c) foreign government-owned companies engaged solely in export promotion activities; or 

(d) engineering consultants or technical experts engaged in specialist projects under contract with any tier of Government, where such contract has been approved by the Federal Government.

Incorporation process/requirements

The registration of businesses is regulated by the Corporate Affairs Commission (CAC). Businesses can be registered using the Commission’s online registration portal ( or by visiting the One-Stop Investment Centre (OSIC) of the Nigerian Investment Promotion Commission (NIPC) to complete or submit paper applications. 

The summary of the online registration process is laid out below: 

  • Conduct an availability search and reservation of proposed registration names.
  • Prepare registration documents and complete relevant forms.
  • Pay the prescribed registration fees and stamp duty. The stamp will be electronically affixed once payment is made online. 
  • Download completed registration documents and append signatures accordingly.
  • Upload scanned registration documents and other necessary documents for processing.
  • Once the documents are approved and notification of approval is received, visit CAC’s office and present original copies of uploaded documents and collect Certificate of Incorporation. 
  • Obtain a Tax Identification Number (TIN) from the Federal Inland Revenue Service.

Documentations at CAC for business registration:

The documents required for filing at CAC are as follows: 

  • Form CAC 1.1 (Application for Registration).
  • Memorandum and Articles of Association.
  • Statement of Compliance
  • Notice of Approval of proposed name.
  • Evidence of payment of registration fees to CAC (the registration fee payable depends on the quantum of authorised share capital). 
  • Evidence of payment of stamp duty. 
  • Recognized form of identification (passport bio-data page, drivers’ licence or National Identity Card) for Director(s)/Shareholder(s) and Secretary
  • Foreign Certificate of Incorporation and Board resolution for subscription to Nigerian company (where applicable)
  • Residence permit of resident foreigners (where applicable)
  • Proficiency certificate (where applicable)

Registration with NIPC

After registration with CAC, and prior to commencement of its business operations, the foreign investor must register at the Nigerian Investment Promotion Commission (NIPC). The NIPC is the main institution that acts as a liaison between foreign investors and Regulators.

One-Stop Investment Centre (OSIC) 

The NIPC has further set up a One-Stop Investment Centre (OSIC), which is an investment facilitation mechanism that coordinates the activities of relevant regulatory Agencies in granting various permits, approvals, licences. Thus, applications for regulatory permits may be applied for through NIPC via OSIC or directly to the relevant regulatory Agencies.[1]

Basically, the key services at OSIC comprise granting of business entry approvals, licenses and authorizations within the shortest possible time; provision of general information on the Nigerian economy, investment climate, legal and regulatory framework, as well as sector and industry-specific information to aid existing and prospective investors in making informed business decisions; and facilitation and follow-up services on behalf of investors in all government ministries, departments and agencies.

Procedure/documentations at NIPC for business registration:

The summary of business registration process at the NIPC is as follows: 

  • Submit a formal Application addressed to the Executive Secretary of NIPC for registration of foreign Nigerian company, with a duly completed NIPC Form 1.
  • The following documents should be annexed to the Application: 
    • Duly completed NIPC Form I;
    • Certified True Copy of Memorandum & Articles of Association;
    • A copy of Evidence of Incorporation with minimum of N10million authorised share capital;
    • CAC Form 1.1;
    • Power of Attorney/ Letter of Authority (where applicable); and
    • Evidence of Payment of Processing fee of N15,000.

[1] Corporate Affairs Commission (CAC);

Nigeria Customs Service (NCS);

Department of Petroleum Resources (DPR);

Nigerian Export Promotion Council (NEPC);

Federal Capital Territory Administration (FCTA);

Nigerian Electricity Regulatory Commission (NERC);

Federal Inland Revenue Service (FIRS);

Nigerian Export Processing Zones Authority Federal Ministry of Budget and National Planning (FMB&NP);

Nigerian Investment Promotion Commission (NIPC);

Federal Ministry of Finance (FMF);

Nigeria Immigration Service (NIS);

Federal Ministry of Interior (FMI);

Nigerian Maritime Administration and Safety Agency (NIMASA);

Federal Ministry of Mines and Steel Development (MMSD);

New Nigeria Development Company (NNDC);

Infrastructure Concession Regulatory Commission (ICRC);

National Office for Technology Acquisition & Promotion (NOTAP);

Manufacturers Association of Nigeria (MAN);

Odu’a Investment Company Limited;

Ministry of Foreign Affairs (MFA);

Oil & Gas Free Trade Zones Authority (OGTZ);

National Agency for Food and Drug Administration and Control (NAFDAC);

Pharmacists Council of Nigeria (PCN);

National Bureau of Statistics (NBS);

Standards Organisation of Nigeria (SON);

Nigerian Copyright Commission (NCC);

Central Bank of Nigeria (CBN).

Foreign Participation

Work permits and local content provisions.

Investment Protection 

The Nigerian constitution is the omnibus framework that guarantees fair and equitable treatment for foreign investors and nationals alike, in terms of investments, employment, etc. Meanwhile, the Nigeria Investment Promotion Commission (NIPC) Act, 1995, has taken investment protection further by enacting equal opportunity provisions, and specifically forbids nationalisation or expropriation of a business or asset by any tier of Government, unless the acquisition is in the national interest or for a public purpose in the case of Federal Government.[1] In such cases, investors are guaranteed legal remedy and fair and adequate compensation.     

As a signatory to various international investment treaties,[2] conventions, trade agreements[3] particularly in relation to foreign investment rights protection, there is no doubt that Nigeria is a safe haven for foreign investment and presents foreign investors with viable investment opportunities given its status as the largest consumer market in Africa.  

Work Permits 

Companies in Nigeria, whether wholly foreign-owned or indigenous, that are desirous of hiring a foreigner with special competence to work in Nigeria, must apply and obtain an appropriate Expatriate Quota (EQ), Subject-to-Regularisation (STR) visa and Combined Expatriate Resident Permit and Aliens Card (CERPAC).  

(a) Expatriate Quota/Business Permit

These are issued by the Citizenship and Business Department of the Federal Ministry of Interior (FMI). The EQ permits companies in Nigeria (whether wholly foreign owned, indigenous or indigenous company in partnership with foreign company) to employ foreigners either on long term basis (Permanent Until Reviewed, PUR) or short term basis (Temporary Work Permit, TWP). Business Permit applies solely to wholly foreign owned companies and joint venture. In practice, the EQ is often applied with Business Permit in the case of wholly foreign-owned companies, but they are not the same.

Procedure/highlight of documentations: 

The procedure for obtaining the EQ or Business Permit (through NIPC) are outlined below:

  1. Pay the online registration and processing fees through the FMI portal;
  2. Collect the Application Form (Business Form T1) from the FMI Business Department after payment has been confirmed;
  3. Submit the company’s application letter to the Permanent Secretary FMI, attaching all the required documents as listed below:

(a) for Business Permit:

  • Certificate of Incorporation of the Applicant Company
  • CAC Form 1.1
  • Memorandum and Articles of Association
  • Current Tax clearance Certificate
  • Joint Venture Agreement (where applicable)
  • Lease Agreement, Certificate of Occupancy or Rent Receipt
  • Feasibility report and Project Implementation Program of the company, incorporating management succession schedule for qualified Nigerians.

(b) for Expatriate Quota, attach same documents in (a) above, including:

  • Evidence of capital importation (e.g. Form M, Profoma Invoice, Shipping documents and Clean Certificate of Inspection issued by Govt. Appointed Pre-shipment Inspection Agents).
  • Licenses / Permits / Certificate from relevant Government Agencies, Department of Ministries for the operation or execution of project if the company is engaged in oil services, health care services, fishing, mining, construction.
  • Details of the expatriates (indicating their proposed annual salaries, job description and qualifications. C.V and copies of credentials are to be attached).
  • Bank reference letter
  • Business permit (not applicable to companies with 100% indigenous ownership) 
  • Evidence of work at hand, its duration and value attached to the contract if the company is involved in building, civil engineering etc.;
  1. Pay approval fee through the FMI portal. The total cost will depend on the number of expatriate quotas approved; 
  2. Collect the letter of approval from the Business Registry. This can be done by a company representative with valid identification.

(b) Subject to Regularisation (STR) visa

After the appropriate EQ approval is obtained, application must be made to the Nigerian Embassy in expatriate’s country of residence requesting that the expatriate be issued a Subject to Regularisation (STR) visa. This visa is usually issued to expatriate hired to work in Nigeria based on the EQ approval. 

Procedure/highlight of documentations:

The process for applying for the STR is as follows:

  1. Complete and print two copies of the online visa application form (IMM22).
  2. Make online payment using the website of Nigeria Immigration Service (NIS) and print the payment receipt.
  3. Affix two (2) passport-sized photographs of the expatriate to the completed visa form and submit along with the following required documents in person or via post to the Nigerian Embassy in the country of applicant’s residence:
  • Formal application for STR Visa from the Employer/Institution accepting immigration responsibility
  • Two (2) passport-sized photographs taken within the last six (6) months
  • Valid passport with a minimum of 6-months validity and 2 blank pages for visa endorsement
  • Letters of Offer of Appointment and Acceptance of Offer
  • Expatriate Quota Approval
  • Curriculum Vitae or Resume of the expatriate concerned.
  • Duly completed Visa Form IMM22 – available online (To be completed by the employer)
  • For CEOs, MDs and GMs, there is need for extract of Board Resolution
  • Evidence of financial support

(c) Combined Expatriate Resident Permit and Aliens Card (CERPAC)

Upon receipt of STR and within ninety (90) days of arrival in Nigeria, the expatriate is required to apply to NIS, through his employer, for a Combined Expatriate Resident Permit and Aliens Card (CERPAC). The employer usually bears full immigration responsibility for the expatriate.

Procedure/highlight of documentations:

The following are the requirements for the issuance of CERPAC:

  • Application letter from the employer requesting regularization of stay and accepting immigration responsibility on behalf of the expatriate;
  • Letter of appointment/employment;
  • Acceptance of offer of appointment /employment;
  • Form IMM22 with three (3) passport size photographs;
  • Quota approval;
  • Vetted credentials; and
  • Valid Passport with STR visa and photocopies of relevant pages.

(d) Other permits

(i) Temporary Work Permit (TWP)—This is issued for positions within a company that will be occupied on a temporary basis, such as independent contractors, third party staff, experts, etc. invited to perform certain technical and short-term assignments. A TWP can be obtained from the office of the Comptroller General of Nigeria Immigration Service. 

The requirements are as follows:

  • Application to the Comptroller General of Immigration set out on the company’s letterhead; 
  • Confirmed airline return ticket;
  • Acceptance of immigration responsibility (IR) by inviting company;
  • Certificate of Incorporation and the company’s profile;
  • Memorandum and Articles of Association; and
  • Name of the expatriate. 

(ii) Visa on Arrival —Available to frequent travelers, high net-worth investors or visitors who may not be able to obtain Nigerian visas due to the absence of a Nigerian Embassy in their countries or exigencies of business travels. 

The process/requirement is highlighted below:

  • Apply and obtain a ‘Visa on Arrival Approval Letter’ before commencing travel through the Immigration Desk at the NIPC OSIC or send email to 
  • Upon arrival, pay (or show evidence of online payment) for, and be issued, the visa.

(iii) ECOWAS Residence Card—Citizens of countries that are members of the Economic Community of West African States (ECOWAS) can reside and work in Nigeria without residence permits.[4] However, they are required to apply for the ECOWAS Residence Card within 90 days of their arrival.

The requirements are as follows: 

  • Valid travel documents e.g. Country’s Passport or ECOWAS Travel Certificate.
  • Admission through approved port of entry.
  • Procurement of Residence Card, valid for 5 years subject to Passport validity.
  • Registration of business with the CAC in accordance with CAMA (as amended).

Local Content Provisions 

Applicable sectors:

By virtue of the NIPC Act, Nigeria liberalised all sectors of its economy to foreign investment, except business comprised in the negative list.[5]The Act further granted foreign Investors the right to fully own Nigerian companies. However, it is important to highlight that these milestones notwithstanding, certain industries in Nigeria retained the requirement that ensured compulsory participation or control of businesses within such industries by Nigerians. Some of these industries are highlighted below: 

  • Oil & Gas industry:
    • It is mandatory for companies desirous of hiring expatriates in the oil and gas industry to apply and obtain requisite approvals from the Nigerian Content Development & Monitoring Board (NCDMB) before applying for EQ, TWP or other relevant permits from the FMI, NIS or other Government agencies.[6]
    • Any company is allowed for each of its operations, a maximum of 5% of management positions as may be approved by the NCDMB as EQ. 
    • The requesting company must provide for Nigerians to understudy each incumbent expatriate for a maximum period of four (4) years after which, the position shall become “Nigerianised.”[8]
    • All applications for approval from NCDMB before applying for EQ from FMI shall be accompanied with the following documents: 
  • Succession Plan.
  • Organizational chart of the Applicant Company.
  • Advert Report (for new applications).
  • Job Descriptions/qualifications for each job role.
  • Training schedule for understudies and other Nigerian staff.
  • Employment commitment for Nigerians within the 2 years quota grant period.
  • Past FMI approval letters for the required positions.
  • Current DPR permits.
  • Proof of expatriate registration with professional bodies in Nigeria.
  • Cross posting/exchange program.

  • Companies deploying expatriates in the industry must register on the Nigerian Oil and Gas Industry Content Joint Qualification System (NOGICJQS), and undertake biometric enrolment of all expatriates in their employment as part of the conditions they must fulfil before securing appropriate EQ applications with the FMI. 
  • An Oil Prospecting Licence, Oil Exploring Licence or Oil Mining Lease is granted exclusively to a company incorporated in Nigeria.
  • Preference must be given Nigerian Independent Contractors in the award of all projects for which contract is to be awarded in the Nigerian oil and gas industry, subject to fulfilment of certain conditions by the Minister.
  • Legal, financial and insurance services—Entities in the industry must retain Nigerian:
    • lawyers or firms for legal services, and 50% of Nigerian content is required.[8]
    • financial institutions for financial services, except the NCDMB is satisfied that it is impracticable. 50% of Nigerian content is required.[9]
    • insurance companies duly licensed for all insurable risks relating to their oil and gas business. 70% of Nigerian content is required for non-life insurance services. 
  • Maritime:
    • Vessels wholly owned and manned by a Nigerian citizen, built and registered in Nigeria are granted the exclusive right to engage in Cabotage trade (i.e. domestic coastal carriage of cargo and passengers within the coastal, territorial, inland waters, island or any point within the exclusive economic zone of Nigeria).[10]
    • The Minister in charge of shipping may grant waivers and authorise a suspension of this strict regime, if satisfied that no wholly-owned Nigerian vessel is suitable for provide those services.[11]
  • Aviation: 
    • The Nigerian Civil Aviation Authority grants aviation licence or other related permits exclusively to a Nigerian citizen or a corporate body controlled by Nigerians. 
    • This restriction does not apply to licences, permits, certificates and other authorisations given for operating an aircraft privately.
  • Real Estate: 
    • Foreigners are precluded from acquiring real estate individually or directly. However, a wholly foreign-owned Nigerian company can validly acquire such title.

[1] section 25 subsections (2) & (3) of the NIPC Act. 


[3] International Promotion & Protection Agreement; Double Taxation Agreement; ECOWAS Liberalisation Scheme; etc.

[4] See Regulations 11 of the 2017 Immigration Regulations

[5] Production of arms and ammunition, dealing in narcotics drugs and psychotropic substances, production of military and para-military wears

[6] section 33 of Nigerian Oil and Gas Industry Content Development Act, 2010 (NOGICD Act).

[7] This holds true except for projects with shorter life span for which special consideration would be made by the NCDMB for a certificate of no objection based on the Human Capacity Development Plan (HCDP) submitted by applicants for the affected position. See section 31(1) and 32 of NOGIC Act.

[8] section 51 of the Local Content Act.

[9] Ibid, section 52(1).

[10] Section 3 of the Coastal and Inland Shipping (Cabotage) Act, 2003

[11] Ibid., section 9


Probation Period.

There is no provision in the Nigerian employment law that indicates the length of probation period. However, section 7(1) of the Labour Act 2004 is implied to make a provision for it. The section provides that not later than three (3) months after the beginning of a worker’s period of employment with an employer, the employer shall give to the worker a written statement specifying particulars of terms of employment.

It is common practice among employers in Nigeria to set the probation period between three (3) and six (6) months.

Leave Periods

Annual Leave

After 12 months’ continuous service, employees are entitled to a holiday of at least six (6) working days; or in the case of a person under the age of sixteen (16) years (including an apprentice), at least twelve (12) working days. In practice annual leave is set by the employer based on the Company’s policy and the length for annual leave typically depends on the designation of the staff

Maternity Leave

The law provides for 12 weeks of maternity leave which shall be taken 6 weeks before actual delivery and 6 weeks after deliver. 

Paternity Leave

Not provided under the law.

Sick Leave

Employees are entitled to paid sick leave of up to twelve (12) workdays in a calendar year.

Compassionate Leave

Not provided under the law

Social Security Funds and Other Benefits

Contributory Pension Scheme

All employers in the public sector, and private employers that have 15 or more employees are required, under the Pension Reform Act (PRA) 2014, to participate in a contributory pension scheme in favour of their employees. The old law enacted in 2004 has been repealed and re-enacted as the PRA 2014.

  • Under the Pension Reform Act, 2014, employers and employees are required to make a minimum contribution of 10% and 8% respectively of the employee’s monthly emoluments to a Pension Fund Administrator chosen by the employee. 
  • In addition, an employer is also required to maintain a Group Life Insurance Policy for each employee for a minimum of three times the annual total emolument of the employee.

Expatriate employees may join the scheme at their discretion and with the agreement of their employers.

The due date of compliance is not later than 7 working days after the payment of employees’ salary

Employee Compensation Scheme

By virtue of the Employee’s Compensation Act, 2010 employers are required to contribute 1% of their payroll costs to the National Social Insurance Trust Fund (NSITF) in order to provide adequate compensation to employees (or their dependents) in the event of death, injury, disease or disability arising out of, or in the course of employment.

Industrial Training Fund (ITF)

Industry and commerce employers are required to contribute 1% of their annual payroll costs to the ITF, if they:

  • have five (5) or more employees or an annual turnover of ₦50million and above;
  • bid for or solicit contracts, businesses, goods and services from public and private establishments;
  • require approval for Expatriate Quota; or
  • utilise Customs services for import and export.

The ITF Governing Council may effect a refund of up to 50% of an employer’s contributions if it is satisfied that the training programmes provided by the employer to its employees are appropriate for the ITF’s scheme 

National Housing Fund (NHF)

The rate of NHF is 2.5% of monthly basic salary. A schedule of payment indicating the amount deducted from each employee and the period covered to be submitted to the Federal Mortgage Bank of Nigeria.

Employee Compensation Scheme

All employers, including individuals, are required to register with the Nigeria Social Insurance Trust Fund (NSITF) and contribute to the scheme.

Employers are required to make monthly contributions to the NSITF not later than the last day of the month.

1% of total monthly payroll or amount assessed by the NSITF.

Termination of Employment

According to Section 7 of the labour Act 2010, a contract shall be terminated – by the expiry of the period for which it was made; or by the death of the worker before the expiry of that period; or by notice in accordance with section 11 of this Act or in any other way in which a contract is legally terminable or held to be terminated.

The required notice period for the termination of the employment contract depends on length of service. According to Section 11 of the Labour Act 2004, notice to be given shall be:

  • One (1) day, where the contract has continued for more than three (3) months or less;
  • One (1) week, where the contract had continued for more than three (3) months but less than two (2) years;
  • Two (2) weeks, where the contract has continued for a period of two (2) years but less than five (5) years; and
  • One (1) month, where the contract had continued for five years or more.

It should be noted that any notice for a period of one week or more shall be in writing; notice will not be required where any party conducts himself in a manner that is contrary to the terms of the contract or where either party waives his right to notice on any occasion or accepts payment in lieu of notice.


The main taxes, rates and exemptions.

Every company in Nigeria is required to register with the Federal Inland Revenue Service (FIRS) and the relevant State Board of Inland Revenue (SBIR) for tax purposes. After registration, the FIRS and the SBIRs issue Tax Identification Number (TIN) and Payer-ID respectively. There are so many tax regimes in Nigeria today, however, the following paragraphs provide an overview of the main taxes. 

Taxes on foreign companies and service providers 

A foreign company is subject to tax on profits deemed to be derived from Nigeria where the:

  • company has a fixed base in Nigeria; 
  • company does not have a fixed base but habitually operates a trade or business in Nigeria; 
  • trade or business involves a turnkey project;
  • tax authority deems that a transaction between the company and a related entity is one not carried out at arm’s length; and 
  • company has Significant Economic Presence in Nigeria.

Companies Income Tax (CIT)

This is also known as corporate tax. It is chargeable on profits of all companies (except those involved in petroleum operations and companies that are specifically exempted by the CIT Act) in Nigeria. Before now, the CIT standard rate is 30% of the assessable profit (accounting profit after considering disallowable expenses, non-taxable income, loss reliefs and capital allowances) earned in the year preceding assessment. However, the Finance Act 2019 has reviewed the rate for different categories of companies as follows: 

  • Small sized companies (N25million annual turnover and below) = 0%; 
  • Medium sized companies (Above N25m but less than N100m annual turnover) = 20%; and 
  • Large companies (N100m annual turnover and above) = 30%.[1]

Any company doing business in Nigeria, whether resident (registered in Nigeria) or non-resident (foreign company registered outside Nigeria). Non-resident companies are liable to tax on the profit or income derived from Nigeria

Exemptions from f CIT:

  • Not-for-profit entities engaged in ecclesiastical, charitable or educational ·activities of a public character 
  • Registered cooperative societies under specific conditions 
  • Dividend, interest, rent, or royalty derived from a country outside Nigeria and ·brought into Nigeria through government approved channels ·
  • Interest on foreign currency domiciliary account in Nigeria Dividends which have been subject to withholding tax in Nigeria and those distributed from pioneer profits
  • Income from government bonds and treasury bills. This is valid till 2022 ·excluding bonds issued by the Federal Government) 
  • Profits of any Nigerian company in respect of goods exported from Nigeria, provided that the proceeds from such export are repatriated to Nigeria and are used exclusively for the purchase of raw materials, plant, equipment and spare parts.

There are special incentives for the following:

  • Gas utilisation
  • Pioneer industries and products

CIT Filing Procedure

  • All companies (small, medium and big) are exoected to file CIT returns within six (6) months after the accounting year end. However, a new company must file its returns within 18 months from the date of incorporation or 6 months after the end of its first accounting period, whichever is earlier.
  • The filing requirements include audited accounts, tax and capital allowance computations, self-assessment forms
  • Payment of tax is to be made on or before the due date of filing in one lump sum or instalments.
  • Any taxpayer that wishes to pay in instalments prior to the due date of filing may do so; however, the final instalment must be paid on or before the due date of filing
  • A company that pays all of its tax liability 90 days before the due date shall be granted a bonus of 2% of the tax in the case of a medium-sized company or 1% for any other company.
  • A company granted early payment bonus may set-off the bonus against its future taxes.
  • Any tax due and unpaid by the due date of filing shall attract interest and penalties as provided in the tax laws.
  • Failure to file the CIT return on or before the due date attracts N50,000 in the first month of failure and N25,000 in each subsequent month of failure.

Minimum Tax

Minimum tax is computed at a fixed rate of 0.5% of Gross Turnover. Gross turnover, for the purposes of computing minimum tax, shall not include franked investment income. In computing minimum tax, franked investment income is first deducted from the gross turnover (where franked investment income had been included in gross turnover) and the amount derived is multiplied by 0.5%. Franked investment income is defined under Section 80(3) of the Act as dividend received by one company from another after deduction of withholding tax as specified in that Section.

Any dividend that has not suffered WHT is not a franked investment income and shall not be deducted from gross turnover for the purposes of minimum tax. As such, provision of evidence of WHT suffered is a condition to be met before treating dividend income as Franked Investment Income. Also, the franked investment income is only deductible where it has been included in the gross turnover. “Gross turnover” is the gross inflow of economic benefits (cash, revenues, receivables, other assets, etc.) arising from the operating activities of a company such as sale of goods, supply of services, lending of money, letting of assets, granting of rights, investment activities, etc. Gross turnover, for the purposes of minimum tax, includes all operating incomes or revenues anywhere embedded.

The new minimum tax rule is applicable to all companies, except those specifically exempt by the Act, namely: i. Companies with less than N25million gross turnover.

ii. Companies carrying on agricultural trade or business as defined in section 11(4) of CITA. 

iii. Any company in its first four calendar years of business operations.

Capital Gains Act (CGT)

This is 10% tax levied on capital gains accruing to companies (including pioneer companies) and individuals from a sale, exchange or other disposal of properties known as chargeable assets. It is administered jointly by the FIRS and the relevant SBIRs.

Examples of chargeable assets are options, debts and incorporeal property, any currency other than Nigerian currency, Goodwill, Copyrights, Buildings, Chattels etc

Exemptions from  CGT:

  • Exemptions on gains: from disposal of securities, stocks, shares and retirement benefit schemes; arising from take-over, absorption or merger; accruing to unit holders in a trust in respect of disposal of securities, provided the proceeds are re-invested, disposal of main residence or dwelling house of an individual

Deductions Allowed:

  • Initial cost of the asset, stamp duties, cost of enhancing the value of the asset, expenditure incurred in establishing, preserving or defending the title to, or right over the asset, cost of advertisement to find a seller during acquisition and advertisement cost to find a buyer during disposal

Value-Added Tax (VAT)[2]

This is a consumption tax charged at 7.5% on the supply of taxable goods and services. All taxable persons are expected to immediately register for the tax upon the commencement of business. The penalty for failure to register is N50,000 in the first month of default and N25,000 in the subsequent months in which the failure continues.. 

Oil and Gas companies and government agencies are required to deduct VAT at source and remit the VAT on their purchases directly to the FIRS rather than pay it over to their vendors. A non-resident person who makes taxable supplies to a person in Nigeria or to a Nigerian resident, is required to register for the tax with the FIRS. The non-resident person is to use the address of the person to whom it is making the supply, as its Nigerian address, for the purposes of correspondence relating to the tax. The non-resident person shall include VAT on its invoice for the supply of goods or services made  The person who receives the supply in Nigeria is required to withhold and remit the VAT due on the invoice to the FIRS in the currency of transaction.

A non-resident company which have a fixed base (permanent establishment) in Nigeria is required to comply with registration, charging, filing, payment and other requirements as if it is a Nigerian company. As such, such company must register using the address of its place of business in Nigeria (fixed base), issue VAT invoice, file return, remit the tax, submit itself to tax examinations, etc. in accordance with the provisions of the VAT Act.. 

Exemptions from f VAT: 

  • Goods exempted from VAT: medical and pharmaceutical products, basic food items, educational materials, agricultural equipment, fertilizer, equipment purchased for gas utilisation in petroleum operations, exports and baby products; Locally manufactured sanitary towels, pads or tampons.[3]
  • Services exempted from VAT: medical services; services rendered by microfinance banks, people’s banks and mortgage institutions; plays and performances conducted by educational institutions and exported services; ­tuition relating to nursery, primary, secondary and tertiary education.[4]

Exemptions from f VAT: 

Falure to register/ Failure to notify of change of address or permanent cessation of trade or business will all attract N50,000 in the first of default and N25,000 in each subsequent moth

Failure to remit/pay VAT attracts unpaid tax + 10% of tax + interest at CBN MRR

Stamp Duties

This is paid to FIRS or SBIRs on documents such as Conveyances on Sale, Bills of Exchange, Promissory notes, Agreements, Contracts or even documents such as Letters and Certificates of Admission, Instruments of Apprenticeship, Insurance Policies etc. 

  • It is either chargeable at fixed rates or ad valorem on written instruments (except specifically exempted). 
  • The Stamp Duties Act 1939 (as amended)[5] provides the respective duties payable on each documents listed in its Schedule and also a list of items exempted from stamp duties. 
  • Stamp duty is applicable on all dutiable instruments, such as agreements, contracts, receipts, memorandum of understanding, promissory notes, insurance policies and other instruments stipulated in the Schedule to the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria 2004 (as amended) (SDA or “the Act”).
  • The Finance Act, 2019 has expanded the scope of the SDA to include technology, e-commerce and cross-border transactions, in line with global practice and current economic realities.
  • Stamp duty is chargeable on both physical and electronic dutiable instruments, either as a fixed sum or a percentage of the consideration on the instrument (ad-valorem) 
  • The FIRS is the competent authority to impose, charge and collect stamp duties on all dutiable instruments executed between a company and an individual, while the remit of the State tax authorities (STAs) is limited to collection of stamp duties on instruments executed between individuals. However, the FIRS is the relevant tax authority to collect stamp duties on all banking transactions, even when the parties thereto are individuals, especially electronic fund transfers.
  • A fixed-rate of ₦50 FIRS’ adhesive stamp is applicable on all receipts. Also, electronic transfers above ₦10,000 through the Money Deposit Banks (MDBs) will attract a stamp duty of ₦50 which the MDBs are obliged to remit to the FIRS.
  •  Stamp duties due to the Federal Government and collectible by the FIRS are to be remitted into the FIRS Stamp Duties Account with the Central Bank of Nigeria, while the stamp duties due to State Governments are to be remitted to the stamp duties accounts of the States.
  • The postage stamp administered by the Nigerian Postal Service (NIPOST) for delivery of goods does not denote stamp duties and, therefore, is not a substitute for the FIRS’ adhesive stamp.
  • Failure to deduct or remit stamp duties into the appropriate stamp duties account would attract penalty and interest as provided by the SDA.

Personal Income Tax (PIT)

This is imposed on income of individuals, incorporated trustees, partnerships and corporation sole on the basis of residency and payable to the SBIRs. The Personal Income Tax Act requires an employer to deduct and remit its employee income tax under the Pay-As-You-Earn (PAYE) scheme. PITs are chargeable on a progressive scale on taxable annual income at the following rates:

Annual taxable income Rate
First N300,000                                                 7%
Next N300,000                                                  11%
Next N500,000                                                 15%
Next N500,000                                                 19%
Next N1.6 million                          21%
Above N3.2 million                       24%

Every taxable person is liable to a a minimum income tax of 1% of the gross income. This is triggered after where actual tax payable after all reliefs and allowances is less than 1% of gross income.

Benefits in Kind

Benefits in Kind (BIK) provided to an employee by the employer such as official cars, accommodation, etc. are deemed to be part of the employee’s gross emoluments. For items other than accommodation, the deemed annual benefit is 5% of the cost where the asset is owned by the employer or the actual rent paid where the asset is leased by the employer. BIK on accommodation is taxable based on the annual value of the premises as determined for purposes of local rates or as determined by the relevant tax authority


PIT is not applicable on expenses incurred in the performance of employment duties from which it is not intended that the employee should make any gain or profit.

Interest and Dividend

Interest earned from treasury bills, government and corporate bonds are exempt while withholding tax at 10% is the final tax on other interests and dividend.

Reliefs and Deductions

  • Consolidated relief allowance: The Higher of N200,000 and 1% of gross income, plus 20% of gross income. 
  • The deductions allowed are National Housing Fund contribution, National Health Insurance scheme, Life assurance premium, National Pension Scheme
  • Life assurance premium paid in the prior year is granted as a relief in the current year. Only policy on the life of the individual and spouse is eligible.
  • Interest paid on mortgage loan for owner’s occupied property in any year is granted as a relief in the following year.

Filing and Due Dates

  • Individuals are to file returns not later than 31 March annually in respect of the preceding year.
  • Employers are required to file the following documents:

Employers’ Declaration Form (Form H1): showing the income of the employees, taxes deducted and remitted in the preceding year. This is due ·by 31 January. 

Employers’ Remittance Card (Form G): showing the monthly remittances and reference number on the receipt. Copies of the receipt are to accompany ·the form G. 

Declaration of estimated income and application for tax reliefs (Form A).

PAYE must be remitted on or before the 10th day of the month following the payment of salary (e.g. PAYE tax deducted from January salary should be remitted by 10th of February). For individuals under direct assessment, payment must be made along with returns within 90 days of the fiscal year i.e. not later than 31 March.


10% per annum of the amount plus interest on annual basis at bank lending rate (in practice a one-off interest rate of 15% to 21% is applied). Late filing attracts a fine of N500,000.

Petroleum Profit Tax (PPT)

Petroleum Profit Tax is levied on the income of companies engaged in upstream petroleum operations . The rates vary as follows: 

  • 50% for petroleum operations under Production Sharing Contracts (PSC) with the Nigerian National Petroleum Corporation (NNPC). 
  • 65.75% for non-PSC operations, including joint ventures (JVs), in the first five years during which the company has not fully amortised all pre-production capitalised expenditure.
  • 85% for petroleum operations carried out under a JV arrangement with NNPC or any traditional oil concession after five (5) years..

Incentives of PPT

Exemption of dividend of such companies from withholding tax (WHT)

Tertiary Education Tax is treated as a tax deductible ·expense for petroleum companies

Gas income is taxable at CIT rate of 30% while capital investment for gas are deductible as capital allowances against crude oil income at the higher PPT rate

Filing requirements

Companies engaged in petroleum operations shall submit returns, in a form prescribed by the FIRS, of its estimated tax ·for such accounting period. 

Estimated tax returns must be filed within two months of the ·fiscal year (which runs from 1 January to 31 December). 

Actual tax returns must be filed within five months after the end of the accounting period, that is, not later than 31 May.

Tax is payable on actual year basis in 12 equal monthly installments with a final 13th instalment (if there is an underpayment). The first instalment for the year is due by the end of March.

Tertiary Education Tax (TET)

All resident companies are required to contribute 2% of their assessable profits to the Tertiary Education Fund. This tax is usually filed alongside the relevant tax return (PPT or CIT). For companies subject to Petroleum Profit Tax, Tertiary Education Tax is treated as an allowable deduction. 

Incentives—Foreign companies and unincorporated entities are exempt from Tertiary Education Tax. In addition, small sized companies (turnover of below N25 million) are exempted from TET.

Withholding Tax (WHT) 

This is an advance payment of income tax deducted at source on qualifying transactions of the taxpayers (individuals and companies). WHT accruing from payments to companies is remitted to FIRS while payments from individuals should be remitted to SBIRs. The under-listed WHT rates are applicable to all resident and foreign companies and individuals in Nigeria:

[1] Companies Income Tax Act and the Finance Act 2019.

[2] Value Added Tax Act, 1993 (as amended).

[3] First Schedule of VAT Act (as amended) and section 47 of Finance Act, 2019

[4] Ibid.

[5] See further, sections 52 – 56 of the Finance Act, 2019.

Payments CorporatesIndividuals
Directors’ feesn/a10%
Construction and related activities5%5%
Commission, consultancy, technical and management fees, legal fees, audit fees, and other professional fees10%5%
All types of contracts and agency arrangements, other than sales in the ordinary course of business5%5%
Professional fees10%5%

WHT rates for construction contracts

Section 81(2) of CITA provides a Withholding Tax rate of 2.5% for contract of construction of roads, bridges, buildings and power plants.

The 2.5% rate is limited to contract for construction of roads, bridges, buildings and power plants. WHT rate on other forms of construction contracts are not affected; such other contracts shall continue to attract WHT at the rates specified in the relevant legislation;

WHT rate of 2.5% is applicable to construction work only. However, any part of the construction works (other than the actual construction work) subcontracted shall attract WHT at the rate specified in the law. For example, subcontracts for supply of materials, equipment, labour, etc. or services such as survey, architectural design, soil test, environmental impact assessment, structural design etc., shall not qualify for 2.5% WHT rate, but shall attract WHT at the rate specified for such supplies or services in the law

Where construction work and other activities that are preparatory, incidental or ancillary to that construction (e.g. survey, architectural design, soil test, environmental impact assessment, structural design, etc.) are embedded in a construction contract, the applicable WHT rate on the entire contract sum shall be 2.5%. However, any subcontract thereof shall attract WHT at the applicable rate in line with paragraph above.

Significant Economic Presence 

Nigeria published the Companies Income Tax (Significant Economic Presence) Order, 2020 effective February 3, 2020, to define and determine the scope of Significant Economic Presence (SEP) in Nigeria. The Order is made pursuant to the Finance Act 2019 which amended the tax laws and adopted the SEP principle to tax non-Nigerian companies undertaking digital transactions or offering certain services in Nigeria. However, the Act conspicuously did not define SEP thereby creating a gap in its application and implementation.

The Minister of Finance, empowered by the Act, has now issued this Order to provide guidance and clarity on SEP in Nigeria.

Key provisions of the Order include: 

  1. Digital or related transactions

1.     Non-Nigerian companies shall have a significant economic presence in Nigeria and liable to tax where they: 

  1. derive a gross turnover or income of more than N25 million or its equivalent in other currencies, in that year, from any or combination of the following:
  2. streaming or downloading services of digital contents, including but not limited to movies, videos, music, applications, games and e-books to any person in Nigeria;
  3. transmission of data collected about Nigerian users which has been generated from such users’ activities on a digital interface including website or mobile applications;
  4. provisions of goods and services directly or indirectly through digital platform to Nigeria; and
  5. provisions of intermediate services through a digital platform website or other online applications that link suppliers and customers in Nigeria.
  1. use Nigerian domain name (.ng) or register a website address in Nigeria; or
  1. have a purposeful and sustained interaction with persons in Nigeria by customising their digital page or platform to target persons in Nigeria, including reflecting the prices of products or services in Naira or providing options for billing or payment in Naira.                

2.     Companies covered under multilateral agreements or consensus arrangement which address tax challenges arising from the digitization of the economy to which Nigeria is a party shall be treated in accordance with such agreement or arrangement.

  • Services:
  1. Non-Nigerian companies carrying on a trade or business comprising the furnishing of services of technical, professional, management or consultancy in nature, shall have a significant economic presence in Nigeria and liable to tax where it earns any income or receives any payment from:
  1. a person resident in Nigeria; or
  1. a fixed base or agent of a non-Nigerian company in Nigeria.
  • Service of a technical nature means any services of a specialized nature (including advertising services, training, or the provision of personnel) that are neither professional, management nor consultancy services.
  • There is no SEP, and therefore no tax liability, in relation to a payment where the payment is made to an employee of the person making the payment under an employment contract, for teaching in or by an education institution or by a foreign fixed base of a Nigeria Company.

Double Tax Treaties

Nigeria has entered into tax treaties with the following countries in order to avoid double taxation on income and capital gains: Belgium, China, France, Netherlands, South Africa, United Kingdom, Canada, The Czech Republic, Pakistan, Philippines, Romania, Singapore, Slovakia and Italy (Aircrafts and Ships). Consequently, residents from these countries pay a reduced WHT rate of 7.5% rather than 10% on investment incomes (dividends, interest and royalty) derived from Nigeria. 

Transfer Pricing Legislation

The Federal Inland Revenue Service (FIRS), in exercise of powers conferred on it by Section 61 of the Federal Inland Revenue Service (Establishment) Act No.13 of 2007, updated the Income Tax  (Transfer Pricing) Regulations, 2012 (Old Regulations). 

The revised Transfer Pricing (TP) Regulations came into effect from March 2018 and provide the legal framework for the application of the arm’s length principle to transactions between related persons. The FIRS issued a public circular stating that all taxpayers were to fulfil all pending obligations pertaining to filing of TP returns on or before 31 December 2018. Please note that filing of TP returns include TP Documentation Report, TP Declaration and TP Disclosure.

However, connected persons with total related party transactions of less than N300 million (about USD 1 million) may choose not to maintain the TP Documentation but must prepare and submit the TP documentation within 90 days from the date of receipt of a notice from FIRS. Please note that the exception is only applicable to TP documentation but not for TP Declaration and TP Disclosure. Hence, any company that has related party transaction must compulsorily file TP Declaration and Disclosure. 

In addition to the above, the income tax (country-by-country reporting) (CbCR) regulations stipulate that each ultimate parent of a Multinational Enterprises (MNE) Group that is resident for tax purposes in Nigeria shall file a Country-by-Country report with the Federal Inland Revenue Service (FIRS) with respect to its reporting accounting year not later than 12 months after the last day of the reporting year of the MNE Group. It is also very important for any constituent entity of an MNE Group that is resident for tax purposes in Nigeria (whether or not it is the ultimate parent entity or surrogate parent entity) to notify the FIRS of the identity and tax residence of the reporting entity not later than the last day of the reporting accounting year of such MNE Group. Please note that the threshold for complying and filing the CbCR is minimum group revenue of N126 billion where the ultimate parent of the MNE Group is in Nigeria and 750 million Euros where the ultimate parent of the MNE Group is in a country other than Nigeria.

Failure to comply with the TP regulations above will attract some administrative penalties such as follows:

S/NOffences Penalties
1.Failure to file TP Declaration N10 million in the first instance and N10,000 for every day failure continues
2.Failure to file TP DisclosureThe higher of N10 million or 1% of the value of related party transactions not disclosed; and N10,000 for every day in which the default continues
3.Failure to file TP documentation upon requestThe higher of N10 million or 1% of the value of related party transactions not disclosed; and N10,000 for every day in which the default continues
4.Late filing of Country-by-Country ReportN10 million in the first instance and N1,000,000 for every month default continues
5.Failure to provide notifications to FIRS by a constituent entity of an MNE GroupN5 million in the first instance and N10,000 for every day default continues

Tax incentives

The Federal Government has developed various fiscal incentives and initiatives in Nigerian tax laws and sector-wide fiscal concessions in order to improve the attractiveness of the Nigerian investment climate. These incentives and initiatives are coded in the Compendium of Investment Incentives, which is comprised of six (6) principal sections, viz: Investment policies and protections; General tax-based incentives; Sector-specific incentives; Tariff-based incentives; Export incentives and Special Economic Zone. 

  • Pioneer status: companies engaged in industries/products approved as “pioneer industries/products” are:
    • granted a tax holiday from payment of CIT for initial period of 3 years, and renewable for one or two more years;
    • exempted from paying tax on dividends during the pioneer period; and
    • capital allowances can be carried forward and utilised at the end of the tax relief period

To acquire a pioneer status, the Nigerian company can lodge necessary application with the NIPC.

  • Rural investment allowance: this is for companies located at least 20km from government facilities, but who incurred expenditure on electricity, water, tarred road or telephone for purpose of a trade or business carried on by the company. Such company enjoys the following allowance rates: no facilities—100%; no electricity—50%; no water—30%; no tarred road—15%.  Administering agency is FIRS.
  • Investment tax relief: same as Rurual investment allowance, save that the tax relief is not available to the company for more than 3 years. Administering agency is FIRS
  • Deduction for research and development: here, companies and other organisations engaged in research and development activities for commercialization are allowed 20% investment tax credit on their qualifying expenditure for that purpose. Administering agency is FIRS. 
  • Export processing zones: companies approved by Nigeria Export Processing Zones Authority (NEPZA) under the NEPZA Act and operating within an approved Zone enjoy:
  • full tax holiday from Federal, States and Local Governments; 
  • rent-free land at construction stage, thereafter rent shall be payable;
  • 100% capital allowance;
  • free transferability of capital, profits and dividends by foreign investors;
  • duty-free, tax free on import of raw materials for goods destined for re-export;
  • Export expansion grant scheme provides for a post-shipment incentive for non-oil exports. Qualifying exports must fully repatriate proceeds within 300 days. 

Social Security Funds and Other Benefits

Contributory Pension Scheme

All employers in the public sector, and private employers that have 15 or more employees are required, under the Pension Reform Act (PRA) 2014, to participate in a contributory pension scheme in favour of their employees. The old law enacted in 2004 has been repealed and re-enacted as the PRA 2014.

  • Under the Pension Reform Act, 2014, employers and employees are required to make a minimum contribution of 10% and 8% respectively of the employee’s monthly emoluments to a Pension Fund Administrator chosen by the employee. 
  • In addition, an employer is also required to maintain a Group Life Insurance Policy for each employee for a minimum of three times the annual total emolument of the employee.

Expatriate employees may join the scheme at their discretion and with the agreement of their employers.

The due date of compliance is not later than 7 working days after the payment of employees’ salary

Employee Compensation Scheme

By virtue of the Employee’s Compensation Act, 2010 employers are required to contribute 1% of their payroll costs to the National Social Insurance Trust Fund (NSITF) in order to provide adequate compensation to employees (or their dependents) in the event of death, injury, disease or disability arising out of, or in the course of employment.

Industrial Training Fund (ITF)

Industry and commerce employers are required to contribute 1% of their annual payroll costs to the ITF, if they:

  • have five (5) or more employees or an annual turnover of ₦50million and above;
  • bid for or solicit contracts, businesses, goods and services from public and private establishments;
  • require approval for Expatriate Quota; or
  • utilise Customs services for import and export.

The ITF Governing Council may effect a refund of up to 50% of an employer’s contributions if it is satisfied that the training programmes provided by the employer to its employees are appropriate for the ITF’s scheme 

National Housing Fund (NHF)

The rate of NHF is 2.5% of monthly basic salary. A schedule of payment indicating the amount deducted from each employee and the period covered to be submitted to the Federal Mortgage Bank of Nigeria.

Employee Compensation Scheme

All employers, including individuals, are required to register with the Nigeria Social Insurance Trust Fund (NSITF) and contribute to the scheme.

Employers are required to make monthly contributions to the NSITF not later than the last day of the month.

1% of total monthly payroll or amount assessed by the NSITF.

Investments Protection Mechanisms

Investment trends, legal regimes and trade treaties that protect investor rights.

Regulatory Stability 

As a leading investment hub in Africa, Nigeria has proactively undertaken regulatory and statutory reforms that has led to significant influx of foreign investment in different sectors of its economy. The country has gone ahead to put in place several legal safeguards and laws to ensure the protection of indigenous and foreign investments. Some of the legal safeguards can be found in Constitutional provisions, domestic laws and treaties with various States and international organisations.

These legal safeguards are further discussed below: 

Domestic Protection 

1. Capital importation

The following provisions are made under the Foreign Exchange Monitoring and Miscellaneous Provisions (FEMM) Act  guaranteeing a foreign Investor’s investments in Nigeria:[1]

  • Foreigners are eligible to invest in any Nigerian enterprise with foreign currency or capital imported through an Authorized Dealer (a bank authorised by CBN), and converted to Naira in the Nigerian foreign exchange market. 
  • The Authorised Dealer shall within 24 hrs of the capital importation issue the foreign Investor a Certificate of Capital Importation (CCI), and where the capital imported is in the form of equipment, machinery or raw materials, a CCI will also be issued. 
  • The CCI guarantees the foreign Investor’s access to the Nigerian official foreign exchange market for further repatriation of capital and returns on investment.
  • The requesting Nigerian company must present a copy of the CCI to the Authorised Dealer in order to process the foreign Investor’s remittances. 

2. Repatriation of proceeds of investments:[2]

Apart from the FEMM Act, statutory provision is also made in the Nigeria Investment Promotion Commission (NIPC) Act guaranteeingunconditional transfer of capital and returns through an authorized dealer in a freely convertible currency, of:

  • dividends or profits (net of taxes) attributable to the investment;
  • payments in respect of loan servicing where a foreign loan has been obtained; and
  • the remittances of proceeds (net of all taxes), and other obligations in the case of sale or liquidation of the enterprise or any interest attributable to the investment.

3. Protections against expropriation and nationalisation

The NIPC Act guarantees protection against: 

  • expropriation by government of investors’ investments in any enterprise
  • acquisition of an enterprise by the government except such acquisition is made in national interest, or for public purpose.

4. Recourse to international arbitration

  • The NIPC Act grants a foreign investor the option of recourse to international arbitration machinery for the settlement of disputes. 
  • Where there is disagreement on the method of dispute settlement to be adopted, the International Centre for Settlement of Investment Disputes (ICSID) Rules shall apply.
  • The Arbitration and Conciliation Act further provides a unified legal framework for settlement of commercial disputes by arbitration and conciliation. It also makes applicable the Convention on the Recognition and Enforcement of Arbitral Awards.

5. Foreign ownership:

Fully liberalised foreign ownership of investments in any enterprise except enterprises with activities listed on the ‘negative list’[3] which are prohibited for both foreign and Nigerian investors. 

Investment Treaties

Nigeria has signed and ratified trade treaties with several countries all over the globe, which are geared towards maximizing its huge potentials from foreign trade and investments. The essence of the trade treaties is to foster stable legal environment that encourages foreign direct investments; accord citizens/residents of the contracting States rights and guarantees on the protection of their investments and establish a legal regime for the enforcement of those rights. Some of these are highlighted below:

1. African Continental Free Trade Agreement—The Continental Free Trade Agreement will establish a single market for goods and services across fifty-four (54) countries, allow the free movement of business travellers and investments, and create a continental customs union to streamline trade and attract long-term investment. In August 2019, Nigeria became the 53rd (and penultimate) African country to sign the agreement. Full implementation of the agreement will take some time as negotiations covering trade, dispute settlement, investment, competition policy and intellectual property rights would have to be completed.

2. Commonwealth Tax Relief—As a member of the Commonwealth and in order to promote its mutual relationship with other Commonwealth states, Nigeria has provided a tax relief for profits gained in those states, which profits are also taxable in Nigeria. 

Incentive: Nigerian companies are subject to a cap of half of the Nigerian tax rate for such company incomes derived in those states.[4]


  • Nigerian companies should enjoy reciprocal protections in the laws of the relevant Commonwealth country and Republic of Ireland;
  • Annual claim for relief should be made to the FIRS no later than six years after the end of that year. 

3. Investment Promotion and Protection Agreement—In seeking to foster reciprocal promotion and protection of Nigerian investments and to provide a baseline minimum protection of these investments within the jurisdiction of participating States, Nigeria has entered into various Investment Promotion and Protection Agreements (IPPAs) with the following countries: China, Finland, France, Germany, Italy, Korea Republic, Netherlands, Romania, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan Province of China, United Kingdom. 

4. ECOWAS Trade Liberalisation Scheme—ECOWAS Treaty executed with 15 West African countries with the following incentives: 

  • abolition of customs duties levied on imports and exports of goods produced and moving among member states
  • abolition of non-tariff barriers among member states to facilitate the free movement of goods and services across member states.

5. African Growth and Opportunity ActAGOA builds on and significantly enhances the trade preferences under the US Generalised System of Preferences (GSP). Along with the GSP, it provides qualifying Sub-Saharan African beneficiary countries, including Nigeria, with non-reciprocal duty-free access to the US market for approximately 6,500 products, including for some categories considered to be ‘sensitive’.

[1] Section 15(1)(2) of Foreign Exchange Monitoring and Miscellaneous Provision Act.

[2] See section 24 Nigeria Investment Promotion Commission (NIPC) Act; and section 15(4)(5) of the Foreign Exchange Monitoring and Miscellaneous Provision Act

[3] The ‘negative list’ includes (a) production of arms, ammunition, etc; (b) production of and dealing in narcotic drugs and psychotropic substances; (c) production of military and para-military wears and accoutrement, including those of the Police and the Customs, Immigration and Prison Services; and (d) such other items as the Federal Executive Council may, from time to time, determine.

[4] See section 44 of the Companies Income Tax (CIT) Act.

Real Property Acquisition 

Key insights.

The legal framework and policies that affect acquisition of real estate in Nigeria are highlighted below: 

Leasehold ownership 

  1. The Land Use Act 1978 vests absolute ownership of all lands within each State (except those earmarked as Federal lands) in the Governor of that State.
  • State Governors administer these lands by granting leaseholds (Right of Occupancy) to individuals and corporate entities to hold and use subject to certain conditions some of which are: 
  • a term not exceeding 99 years. 
  • State Governor’s reversionary interest upon expiration of the term granted.
  • payment of an annual rental, payment of a premium, purpose of use, nature of development, and revocation for non-compliance.
  • State Governor’s consent must be sought and obtained before a valid legal transfer of real estate can be made to any person.  
  • Foreigners are precluded from acquiring real estate directly. However, a wholly foreign-owned Nigerian company can validly acquire such title.

No actual sale: 

  1. Transfer or assignment does not mean actual sale, but is simply transfer of legal right to occupy and use for a term. 
  • The State Governor is the owner, hence the need for his consent before transfer. 
  • Title deeds/documents like Certificate of Occupancy and Deeds of Assignment serve as evidence of leasehold interests vested in individuals or corporate entities. 

Procedure/requirements for acquiring real estate:

The process of acquiring real estate in Nigeria vary from State to State, depending on the system of registering property (whether it is registered conveyancing or unregistered conveyancing) practiced in the State. However, regardless of the applicable system, the widely accepted procedure is as follows: 

  1. Physical inspection of the real estate 
  2. Investigation and due diligence on vendor’s title (it is vital to engage an experienced Solicitor for advice and guidance at this stage) in order to ascertain 
  3. nature of the title/interest
  4. capacity of the vendor to assign
  5. adverse claims/interests or litigation 
  6. the land use designation and zoning purpose
  7. the unexpired term of years
  8. survey and size of the property;
  9. confirmation as to whether or not the property is under government acquisition
  10. Preparation and execution of title documents
  11. Obtain Certified True Copy of title documents and survey plan 
  12. Pay charting fee, endorsement fee and Form 1C 
  13. Submit an application with executed title deeds and relevant documents at the Lands Registry 
  14. Assessment of fees/taxes payable for consent fee, stamp duty, registration fee and sundry charges/taxes. Note—consent and registration fees differ across various States. 
  15. Register title in the Register of Deeds at the Lands Registry of the relevant State.

Tech Startups

Major highlights:

Business Structure

The first consideration to tech start-up is choice of business structure to be undertaken. In Nigeria, business can be undertaken using any of the following models: Business Names in the nature of Sole proprietorship or Partnership and Companies (see Chapter One of this Legal Guide). Having previously considered the dynamics of Companies, the key features of Business Names are summarised below: 


  • No dissimilarity between the Proprietor and the business, since the Proprietor usually wants to just carry out business activities on his own.
  • Admits of less formality in administration, as no rigid corporate government is required.


  • Joint ownership of the business endeavours and partnership property among Partners.
  • Partners are personally liable for the venture’s obligations.
  • In the case of limited partnership, there should be at least one general Partner with unlimited liability.
  • For limited liability partnership, the liabilities of the Partners can be limited where the partnership is being wound up.

Registration of Intellectual Property 

In view of the uniqueness in the operations and processes of tech startups, especially their focus on creativity, expression of ideas in tangible forms, designs, marks, innovations, etc., it is crucial that their inherent rights in these endeavours are registered under Nigeria law. It is the registration of the creative works, ideas, innovations, etc. that confers adequate protection against infringements and thefts. 

The types of intellectual properties recognised under Nigerian law are trademarks, patents, industrial designs and copyright. The key highlights of their features are highlighted below:


  • For any foreign trademark to enjoy statutory protection in Nigeria, it must be registered with the Registrar of Trademarks. 
  • A trademark registration is valid for an initial period of 7 years, subject to renewal for another period of 14 years. 
  • The laws that regulates trademarks in Nigeria are the Trademarks Act 1990. the Trademarks Regulation 1967 and the Merchandise Marks Act 2004. 


  • In Nigeria, a patentable invention is one which is new, results from inventive activity and can be applied industrially. Plant or animal varieties; essential biological processes for the production of plants or animals; or any invention which would be contrary to public order or morality if published or exploited are not patentable in Nigeria. 
  • Foreign patented inventions do not have legal protection in Nigeria, unless duly registered with the Registrar of Patents. 
  • It is possible for a foreigner to rely on priority from an application he filed in a contracting State to the Patents Cooperation Treaty. 
  • The validity period of a patent is 20 years from date of filing, subject to payment of the prescribed annuity. 
  • The Patents and Designs Act regulates the registration of patents in Nigeria. 

Industrial Designs:

  • Any combination of lines or colours or both, and any three-dimensional form (whether or not associated with colours), intended to be used as a model or pattern for multiplication by industrial process and not just to obtain a technical result. 
  • It must be new and not contrary to public order or morality. 
  • An application for registration is made to the Registrar of Patents and Designs. 
  • Valid for initial period of 5 years, subject to renewal for 2 consecutive periods of five years. 
  • The Patents and Designs Act also regulates the registration and use of industrial designs in Nigeria. 


  • Automatically vested on works eligible for copyright
  • Works eligible for registration are (a) cinematograph films, literary, musical and artistic with protection for 70 years after the author’s death; and (b) sound recordings and broadcasts which are valid for 50 years after the making of first recording or broadcast. 
  • The Copyright Act regulates the use and commercialisation of copyright in Nigeria.

The registration process of the above rights have their intricate and respective processes, but generally they are all involve the stages highlighted below:

  • Availability search to ascertain the existence of similar rights sought to be registered;
  • Application for registration of the ideas, creative work, designs or marks at which stage, 
  • Approval in principle through issuance of a certificate of registration. 
  • Upon registration, the relevant startup becomes the owner/author of the creative work, designs, marks, innovations, etc. and enjoys the benefit derived therefrom including legal protection from thefts and undue exploitation by third parties. 

Regulatory Framework 

National Information Technology Development Agency (NITDA): 

All technology companies in Nigeria should be registered with NITDA. It is under the supervision and coordination of the Ministry of Communications and has the following roles: 

  • Operate and implement the National Information Technology policy and give effect to provisions of the NITDA Act, 2007;
    • Enter into strategic alliance with the private sector as well as international organizations for the actualization of the Information Technology vision;
    • Develop and regulate the Information Technology sector in Nigeria;
    • Ensure that Information Technology resources are readily available to promote Nigerian development; and
    • Empower Nigerians to participate in software and IT system development.

NOTAP Registration: 

The National Office for Technology Acquisition and Promotion (NOTAP) is the body that regulates the business of technology and the transfer of technology or technical expertise in Nigeria. The Office registers technology acquisition agreements involving technology company. Registration of such agreements is a pre-condition for obtaining approval to repatriate any investment returns that may be due to the foreign Investor through an Authorised Dealer or the CBN. Conversely, non-registration on the other hand, prevents repatriation of investment returns.

Fiscal Incentives for Tech Start-ups

  • Duty waivers, tax exemptions, tax holidays, rebate, accelerated capital allowances, etc. are available to companies in (a) business of installation of scientific instruments and communications equipment; (b) manufacture of telecommunications cables; (c) production of ICT equipment; (d) e-commerce services and software development and publishing. 
  • The above companies are further qualified for pioneer status tax incentive for between 3 – 5 years.

Data Protection

Major highlights:

On January 25, 2019, the National Information Technology Development Agency (NITDA), pursuant to its enabling law, issued the Nigeria Data Protection Regulation 2019 (the “Regulation”) with the following objectives: 

  1. safeguard of the rights of natural persons to data privacy;
  2. foster safe conduct of transactions involving the exchange of personal data;
  3. prevent manipulation of personal data[1] and
  4. ensure that Nigerian businesses remain competitive in international trade, through a just and equitable legal regulatory framework on data protection and which regulatory framework is in tune with global best practices.


The Regulation applies to all: 

  • transactions intended for the processing of personal data and to actual processing of personal data, regardless of the means by which the data processing is being conducted or intended to be conducted and in respect of natural persons in Nigeria;
  • natural persons residing in Nigeria or residing outside Nigeria but of Nigerian descent.

Key Points 

1. Lawful processing—data processing is deemed lawful if one of the following occurs: 

  1. the data subject has given consent to the processing of his or her personal data for one or more specific purposes;
  2. processing is necessary for the performance of a contract to which the Data Subject is party or in order to take steps at the request of the Data Subject prior to entering into a contract;
  3. processing is necessary for compliance with a legal obligation to which the Controller is subject;
  4. processing is necessary in order to protect the vital interests of the data subject or of another natural person and
  5. processing is necessary for the performance of a task carried out in the public interest or in the exercise of official public mandate vested in the controller;

2. Privacy Policy—The Regulation requires that any organisation through which data is being collected or processed shall display a simple and conspicuous privacy policy that the class of Data Subjects[2] being targeted can understand. The policy shall also contain the following: 

  • what constitutes the Data Subject’s consent; 
    • description of collectable personal information; 
    • purpose of collection of personal data; 
    • technical methods used to collect and store personal information, cookies, JWT, web tokens, etc.; 
    • access (if any) of third parties to personal data and purpose of access; 
    • a highlight of the principles of the Regulation; 
    • available remedies in the event of violation of the privacy policy; 
    • the time frame for remedy; and
    • any limitation clause.

3. Data Security—There is an obligation on Data Controller[3] (i.e. corporate body or person involved in data processing or the control of data) to develop security measures to protect such data. Such measures include but not limited to protecting systems from hackers, setting up firewalls, storing data securely with access to specific authorized individuals, employing data encryption technologies, developing organizational policy for handling personal data (and other sensitive or confidential data), protection of emailing systems and continuous capacity building for staff.

A person or corporate body will be liable for the actions or inactions of third parties who the organisation or person contracted to handle the personal data of Data Subjects. The Regulation also imposes a general duty of care towards a Data Subject on anyone entrusted with the personal data of the data subject or who is in possession of such personal data.[4]

4. Data Subject’s Right of Objection 

The right of a Data Subject to object to the processing of his data shall be safeguarded at all times. Accordingly, a Data Subject shall have the option to:

  • object to the processing of his personal data by the Data Controller for marketing purposes, and 
  • be expressly and manifestly offered the mechanism for objection to any form of data processing at no cost whatsoever to the Data Subject.

5. Penalty for Default[5]—The penalties for a breach of the Regulation are (in addition to any other criminal liability that such breach might give rise to) as follows: 

  • in the case of a Data Controller dealing with more than 10,000 Data Subjects, payment of the fine of 2% of its annual gross revenue of the preceding year or payment of the sum of N10,000,000 (ten million Naira), whichever is greater; 
  • in the case of a Data Controller dealing with less than 10,000 Data Subjects, payment of the fine of 1% of its annual gross revenue of the preceding year or payment of the sum of N2,000,000 (two million Naira), whichever is greater.

[1] “Personal Data” under the Regulations means “any information relating to an identified or identifiable natural person (‘data subject’); an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person; It can be anything from a name, address, a photo, an email address, bank details, posts on social networking websites, medical information, and other unique identifier such as but not limited to MAC address, IP address, IMEI number, IMSI number, SIM and others.”

[2] “Data Subject” means “an identifiable person; one who can be identified directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity.”

[3] “Data Controller” means a person who either alone, jointly with other persons or in common with other persons or as a statutory body determines the purposes for and the manner in which personal data is processed or is to be processed.

[4] Section 2.1(2)(3) of the Regulation

[5] Section 2.10 of the Regulation

Dispute Resolution

Litigation, ADR methods and enforcement of foreign judgments 

and arbitral awards. 

Disputes arising out of commercial transaction can be settled either by recourse to litigation, arbitration, mediation, and other alternative dispute resolution methods. 


In Nigeria, it is proper that before an aggrieved person approaches the Courts for redress, he should first consider some preliminary matters. Failure to consider these preliminary matters may lead to termination of the suit or dismissal at the end of a tortuous and costly trial. Such preliminary are too numerous to highlight, however some of the key matters are considered below: 

  1. Limitation Period: This is the time within a legal wrong may be initiated in Court. These time limits vary depending on the subject-matter of the dispute. For example, the time limit for initiating actions based on:
  • Simple contracts, debt recovery is 6 years; 
  • Land, judgment of Court, instruments under seal, claim from deceased person’s personal estate is 12 years
  • damages for negligence, slander, nuisance, etc is 3 years. 
  • action against Public Officers is 3 months; 
  • action by State Authority to recover land is 20 years
  • Locus StandiThis means legal capacity to institute proceedings in Court. No one can properly sue for the enforcement of a right apart from the person, in whom a right is vested as his personal right.
  • Conditions Precedent: The law sometimes require certain conditions to be satisfied before filing an action in Court. Such condition precedents may be by way of service of Pre-Action Notice or satisfaction of other steps required by law before commencement of action, like Case Management Conference, where the Judge assesses the suitability of the matter for alternative dispute resolution and gives necessary directions.
  • Cause of Action: There must be a factual situation, the existence of which entitles one person to obtain from the court a remedy against another person. 
  • JurisdictionJurisdiction is the legal capacity of the Court to hear and determine judicial proceedings. A court of law can only exercise judicial powers when it has jurisdiction.

Alternative Dispute Resolution (ADR) Methods 

These are alternative procedures outside the litigation method, often employed to resolve disputes in an efficient, mutually beneficial and timely fashion for Parties. These consists of negotiation, mediation, conciliation and Arbitration which is now commonly resorted to in settling commercial disputes in Nigeria. In Nigeria today, foreign investors are accorded the same rights as nationals to adopt any of the above ADR process to resolve their commercial disputes whenever such arise. 

Some features of these ADR methods are highlighted below: 

  1. Negotiation:
  2. Involves parties discussing and agreeing to terms or reaching certain agreement without the aid or intervention of a third party. 
  3. Comprised of several stages, viz: opening, bargaining, closing and execution. 
  4. Different approaches that can either be soft; hard or firm. 
  • Mediation:
  • Essentially a non-binding dispute resolution mechanism. 
  • It involves a neutral third party who tries to help the disputing parties reach a mutually agreeable solution. 
  • The third party known as the Mediator should be impartial and not take decision for the parties rather he helps and assists in identifying the issues and interests that need to be resolved. 
  • An agreement reached by the parties during mediation is enforceable if the terms of settlement are reduced into writing by the parties and witnessed by their Counsel. 
  • The term of settlement will thereafter be filed in court and made the judgment of the court in form of a consent judgment.
  • Conciliation:
  • A neutral person meets with the parties to a dispute and explores how the dispute might be resolved. The Conciliator may deliver his opinion as to the merit of the dispute in necessary cases. 
  • Arbitration:
  • Involving one or more neutral third parties (the “Arbitrator(s)”) usually agreed upon by the disputing parties. 
  • The decision of the Arbitrator(s) is called an Award, and is enforceable like a Court’s Judgment. 
  • The principal legislation dealing with arbitration in Nigeria is Arbitration and Conciliation Act, which reflects in many respects the provisions of the UNCITRAL Model law and also consistent with 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Award (New York Convention).
  • There must be a written agreement between Parties to submit any dispute arising from their transaction to arbitration, in order to make the arbitral Award enforceable. 
  • Parties determine the rules of procedure to be adopted at the arbitral proceedings or the tribunal may so determine in the absence of Parties agreement. 
  • An arbitral Award must be signed by all the Arbitrators.
  • Enforcement of Arbitral Award—the Party who got the Award in his favour may apply to the High Court for leave to enforce the Award as though the Award was a Judgment of the Court. 
  • All arbitral Awards made in Nigeria can be enforced in England and Wales or in any other country that is a signatory to the New York Convention. 


In Nigeria, Judgment may be enforced in any one of the ways highlighted below: 

  1. Writ of Fieri Facias directs the Court’s Sheriff to seize and sell the Judgment Debtor’s property to satisfy the Judgment Debt. 
  • Garnishee Proceedings—usually initiated against a person who is indebted to the Judgment Debtor in order to attach the debt in satisfaction of the Judgment Debt. 
  • Writ of Possession is applicable to Judgments relating to land.
  • Order for execution of deeds and negotiable instruments
  • Insolvency proceeding if a company is unable to pay its debts. 
  • Enforcement of Foreign Judgments

Enforcement of judgment of foreign superior Court (equivalent to a Nigerian High Court or more) is possible in Nigeria, and can be done either by (i) action at common law or (ii) reciprocity or reciprocal enforcement. 

(i)       action at common law—Here, institute an action in Nigerian Court claiming reliefs of the foreign judgment. For this enforcement to be successful, the foreign judgment must satisfy the following—the judgment must be final and conclusive; must have been delivered by a competent court of jurisdiction; must be for a definite sum not recoverable as tax, fine or penalty; and if the judgment is not money, its subject-matter must be within the jurisdiction of the foreign court at the time of delivering the judgment. 

(ii)     reciprocal enforcement— Here, the foreign country[1] whose Court delivered the judgment must also be ready to enforce judgments of Nigerian courts in its Courts.[2]  Enforcement of such judgment are by way of registration before the Nigerian High Courts under Foreign Judgments (Reciprocal Enforcement) Act.

[1] Mostly Commonwealth countries. Judgments of countries outside the Commonwealth are enforced by action at common law.

[2] Foreign Judgments (Reciprocal Enforcement) Act

Oneyka Cindy Ojogbo
Attorney & Head of Operations
, Centurion Law Group 

T: +27 11 245 5900  C: SA +27 81 799 9219 C: US +1 (646) 338 2560   NG +234 (0) 803 728 5682

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