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Nigeria company registration

Healy Consultants Group PLC
17 March, 2014

Setting up a company in Nigeria offers an easy access to the African markets. Since Nigeria sits on the 10th largest proven oil and gas reserves on the planet, the country has the 3rd highest projected GDP growth rate in African at 7%, and 7th in the world. This is becoming a super attractive location for foreign investors to register their company in Nigeria. Doing business in Nigeria has the following advantages:

1.    Nigeria boasts 25 Export Processing Zones (EPZ), offering foreign companies i) a tax holiday on all taxes including federal, state, and local government taxes ii) duty free importation iii) 100% repatriation of capital, profits, and dividends;

2.    Nigeria company registration is simplified for EPZ companies. These companies are exempt from all import and export licensing and all expatriate quotas, and one-stop approval is available for permits, operating licenses, and incorporation;

3.    Companies incorporation in a Nigerian EPZ are allowed to sell 100% of their goods into the domestic Nigerian market, while paying a significantly reduced import duty on manufactured goods sold domestically;

4.    Land is rent-free for the first 6 months, for any construction project undertaken in the EPZ;

5.    Nigeria boasts the lowest production costs in Africa, with skilled labor costs in particular being significantly cheaper than other African countries. The average monthly salary of a skilled worker is US$630;

6.    There is no minimum share capital requirement for a Nigeria LLC;

7.    The Nigerian Stock Exchange (NSE) is the number one ranked exchange in Africa, and offers excellent investment prospects, having grown 70.5% in 2013;

8.    The government has recently made the development of physical and industrial infrastructure a priority, with large-scale projects. Investors can expect dramatic improvements in the quality of transportation, communications, electricity, and water supply over the next 5 years;

Before entering the Nigerian market, investors should be aware of the following tax and accounting regulations:

1.    Both resident and non-resident corporations are subject to corporate tax of 30% on net profits;

2.    A Nigeria LLC is liable to pay a VAT rate of 5% on goods unless incorporated within a free zone, in which case the VAT rate is reduced to 0% indefinitely;

3.    Nigeria business setup boasts only 11 double taxation treaties, none of which materially reduce local withholding tax. The Nigeria-UK double tax agreement reduces the withholding rate to 5% on income repatriated to the UK;

4.    Nigeria is in the process of increasing its network of double taxation treaties, including new agreements with Mauritius and Sweden awaiting approval;

5.    Under Nigerian tax law, companies are liable to pay withholding tax on the following types of payment made to a non-resident: interest, royalties, contract and other service fees, lease rentals (for movable property), and technical fees. The rate of withholding is 10% of the gross payment;

6.    A Nigeria LLC can only enjoy tax exemption if incorporated within an Export Processing Zone. If in an EPZ, an export-oriented company is indefinitely exempted from all local, state and federal taxes;

Nigeria is an active member in the Organization of Islamic Cooperation (OIC) trading bloc, minimizing tariffs when trading with any of the 57 member countries, including Saudi Arabia, UAE, and Malaysia. Plus, travelling around Nigeria is inexpensive, with taxi fare and petrol costing significantly less than in other African countries. Consequently the country will be attracting more foreign investments in the near future.

Tags: Taxation | Business

About the Author

Healy Consultants Group PLC

Since 2003, Healy Consultants assists international Clients with company incorporation services worldwide. Our services include: company registration, opening of corporate bank account, accounting and tax services, legal services, jurisdiction comparisons...more.

To inquire more information about global business set up; call us on +65 6735 0120 or email us at email@healyconsultants.com


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