NUTS & BOLTS OF INCORPORATING A BUSINESS IN NIGERIA

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ARGYLE & CLOVER, 1st Floor (West Wing) City Hall Catholic Mission Street Lagos Island
Tel: 07025239755 Email: yemisi.dansu@argyleandclover.com Website: www.argyleandclover.com
Course Paper Delivered at the Fate Foundation on
Nuts & Bolts of Incorporating A Business in Nigeria
It is important that before promoting or setting up a business, the promoters and business owners
are familiar with the key legal guidelines required for starting and running a business in Nigeria.
Such legal guidelines include not only the ideal structure/model for your business but also
licensing and regulatory requirements for various types of business ventures/ specialized sectors
as well as tax requirements.
A keen understanding of the business/company’s legal responsibilities will aid good corporate
governance and protect the business from the wrath of the law due to non-compliance thereby
avoiding costly penalties.
This paper will look into different types of business models/ structures (as well as their legal
implications), regulatory requirements for establishing different kinds of business, tax obligations
etc. The table below represents the various forms of legal entities by which a business can be
carried out in Nigeria.

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REGISTERING AN ENTITY IN NIGERIA
Sole Proprietorship
Sole proprietorship is a type of business entity that is owned and run by a person and in which
there is no legal distinction/separation between the owner of the business and the business i.e. the
owner of the business is held personally liable for the actions and liabilities of the business just as
the owner enjoys the assets and profits of the business. . The owner is in direct control of all
aspects of the business and is legally accountable for the finances of such business.
A Sole Proprietor can register a business name under Part B of the Companies and Allied Matters
Act (CAMA). The Procedure for registration is as follows:
 Reservation of Name
An availability search will be conducted at the Corporate Affairs Commission (CAC) to
confirm availability of the proposed name(s) for the business. The CAC will then determine
whether or not any of the proposed names are available for use. If the name is available, same
shall be reserved for the next 60 days pending formal application for registration.
 Formal application for Registration
This essentially involves the submission of a duly completed Business Name Application Form
to the CAC signed by the Sole Proprietor and payment of requisite filing fees. The form must
disclose the following particulars: -
1. Name of the Business
2. General Nature of Business/Objects
3. Full Address of Principal Place of Business in Nigeria
4. Particulars of the Proprietor i.e. (i) Full Name (ii)Sex (iii) Age (iv)Telephone No (v)
Nationality (vi) Residential Address (vii) Occupation (viii) Email
The completed application form shall be accompanied with (i) Reservation of Name Slip (ii) 2
passport photographs of Proprietor (iii) Photocopy of Valid means of Identification of the
Proprietor i.e. any of the following - Driver’s License; International Passport; Voter’s ID Card; Tax

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Clearance Card (iv) Proficiency Certificate of professional qualification where the business is of a
professional nature
Partnership
A Partnership is a business owned by two or more people for the purpose of making profit. The
Partnership can be owned by individuals as well as corporate bodies. The partners usually share
business profits in particular proportions agreed during the formation of their partnership. Each
partner is liable to pay his personal income tax based on his share of the profit thus the business
itself does not pay income tax.
The Lagos State Partnership Law describes a Partnership to be the relationship which exists
between people, carrying on business otherwise than as a limited liability company or
incorporated trustees, with the sole objective of making and sharing profits.
The name of the Partnership can be registered as a Business name at the CAC under Part B of
CAMA. The procedure for registration of business name has earlier been discussed in this Paper.
Formation of a Partnership
The formation of a partnership can be oral or by a written agreement. It is preferable for the
agreement to be written so that the terms are clearly defined. A well drafted Partnership
agreement should include the following:
1. The name of the business.
2. The Purpose or type of business
3. Commencement and Duration of the Partnership
4. The Principal Place of business of the Partnership
5. Capital Contribution of each Partner
6. Division of Profits and Losses
7. Responsibilities/Obligations of each Partner
8. Meetings

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9. Retirement, Dissolution & Termination
10. Death of Partner
11. Admittance of New Partners
12. Business Expenses & Drawings from Partnership Account
Although there is no requirement by law to have a written partnership agreement, it is advisable
to have the agreement in writing, signed and dated by all the partners. This is because the
partnership agreement acts as a guide to govern partners on their conduct, rights, duties and
responsibilities. Also, it will help to prevent misunderstandings and disputes that may occur
between or among partners in future.
Types of Partnership
General Partnership: This is also known as ‘Ordinary Partnership’. It is a partnership in which all
all the partners actively take part in the day to day operations and management of the business
and have unlimited liability i.e. the Partners are jointly and severally liable for all the debts of the
Partnership even if they have to risk their individual properties.
Limited Partnership: Limited partnership is made up of limited and general partners. It is an
association of one or more limited partners, and at least one general partner. Limited partners are
partners who do not actively take part in the day to day operation and management of the
business, but can inspect the books of accounts of the business. They have limited liability which
means that the liability they bear is limited to the amount of capital contribution they have made
into the business. Limited partners are basically investors who share in the profits of the business.
The general partner(s), irrespective of their co-ownership with limited partners, still have
unlimited liability.

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The Lagos State Partnership Law provides that a Limited Partnership must not consist of more
than twenty (20) people, and must have one (1) or more General partners who shall bear the debts,
liabilities and other obligations of the Partnership.
Registration of Limited Partnerships under the Partnership Law of Lagos State:
Every Limited Partnership carrying on business in Lagos State is obligated to register with the
Registrar of Limited Partnerships in Lagos State. The effect of failure of registration is that each
and every Limited Partner will be deemed in Law to be a General Partner liable for the debts and
other obligations of the Partnership.
Any changes in the registration details of a Limited Partnership must be communicated and
registered with the Registrar of limited Partnerships in Lagos State within seven (7) days of the
consummation of such change.
Any change in the status of a General Partner or in the assignment of the equity of the General
Partner to a Limited Partner must immediately be advertised in the Lagos State Government
Gazette; and until such change is advertised in a Gazette, the change or arrangement or
transaction shall have no effect in Law.
Incorporated Company
Part A of CAMA provides for incorporation of the following types of Companies:
1. Private Limited Liability Company
2. Public Limited Liability Company
3. Company Limited By Guarantee
4. Unlimited Liability Company.
Private Limited Liability Company
A private company is one which it’s stated in its memorandum to be a private company. See
Section 22 of CAMA. It must by its articles restrict the transfer of its shares and its total

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membership must not exceed fifty (50), not including persons who are bonafide in the
employment of the company.
Public Limited Liability Company
A public company is defined as any other company other than a private company and which is
stated in its memorandum as a public company. See Section 24 of CAMA. The differences between
a private company and public company are:
1. Membership of a private company is limited to fifty (50) while membership of a public
company is unlimited.
2. Minimum share capital of a private company is N 10,000.00 while a public company is
N500,000.00. See Section 27(2) (a) of CAMA.
3. A private company can commence business upon incorporation whilst a public company will
have to wait until it has been issued with a certificate by the Registrar.
4. The name of a private company must include “Ltd” while a public limited company is “Plc”
5. A private company is prohibited from inviting the public for subscription to its shares or
debentures. On the other hand, a public company has no such restrictions as its shares can be
freely traded on. A Public Company can be listed or unlisted. It is usually listed when it is
quoted on the Stock Exchange.
Both a private and public limited liability company have the liabilities of their members limited by
the memorandum to the amount, if any, unpaid on the shares respectively held by them.
Company Limited by Guarantee
This is a company incorporated for the purpose of promoting the arts, science, religion, sports,
culture, education, research, charity etc., and the income and property of the company are to be
applied solely towards the promotion of its objects and no portion is to be paid directly or
indirectly to its members except as permitted by CAMA.

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A Company Limited by Guarantee shall not be registered as a company limited by shares and the
liability of its members is limited to such amount as the members respectively undertook to
contribute to the assets of the company in the event of its being would up. Due to the tax
exemption and other benefits granted this type of company, the Consent of the Attorney General
of the Federation is required for the registration.
Unlimited Liability Company
This is a company where there is no limit on the liability of its members. See Section 25 of CAMA.
Name of a Company
The name of a Private Limited Liability Company must end with the word Limited/LTD while
that of a Public Limited Liability Company must end with PLC. The name of a company limited
by Guarantee ends with LTD/GTE while an unlimited liability company ends with
Unlimited/ULTD. See section 29 of CAMA.
Certain names are prohibited while others can only be used with the consent of the Commission.
The name chosen must not be one already registered/similar to a registered name or misleading as
to the nature or extent of its activities or is undesirable offensive or otherwise contrary to public
policy; must not contain the words “Chamber of Commerce” unless it is a company limited by
guarantee; violates any existing trade mark or business name registered in Nigeria unless the
consent of the owner of the trade mark or business name has been obtained.
Except with the consent of the Commission, no company shall be registered by a name which
includes the word “Federal”, “National”, “Regional”, “State”, “Government”, or any other word
which suggests or is calculated to suggest that it enjoys the patronage of the Government of the
Federation or the Government of a State in Nigeria, as the case may be, or any Ministry or
Department of Government; contains the word “Municipal” or “Chartered” or suggests, or is
calculated to suggest, connection with any municipality or other local authority; contains the word

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“Co-operative” or the words “Building Society”; contains the word “Group” or “Holding”. See
Section 30 of CAMA.
Procedure for registering a Company at the CAC:
An availability search will be conducted at the CAC to confirm availability of the proposed
name(s) for the company. If the name is available, same shall be reserved for the next 60 days.
Registration is done by completing and submitting the set of Incorporation Forms which are:
1. CAC Form 2 stating the shareholders of the company and the authorized share capital of the
company together with evidence that the stamp duty payable in respect of the amount of share
capital has been paid. (There must be at least 2 shareholders)
2. CAC Form 7 stating the particulars of the initial directors of the company, of which there must
be at least two.
3. CAC Form 3 stating the situation of the registered office of the company.
4. CAC Form 2.1 stating the particulars of the appointed Company Secretary
5. CAC Form 4 (Declaration of Compliance form sworn to by a Lawyer that all matters
preliminary to the registration of the company have been complied with).
The completed incorporation form shall be submitted with (i) the reservation of name Slip/Form
(ii) 3 copies of the Memorandum (which contains the objects of the company) and Articles of
Association of the Company (which must be subscribed to by at least two persons, together
holding at least 25% of the company’s authorized share capital together (iii) Photocopies of valid
means of Identification of the Directors and Shareholders i.e. Valid Driver’s License, International
Passport, National Identity Card, Voters Registration Card (iv) Proficiency certificate for
professional/specialized line of business.
Consent of the Attorney General of the Federation is required before a Company Limited by
Guarantee can be registered.

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Stamp duty and filing fees are payable to the Federal Commissioner for Stamp Duties and the
Registrar - General of Companies respectively. Once the application is approved, a Certificate of
Incorporation will be issued and the company can commence business.
The CAC may query an application and request for further documentation. Also the CAC
reserves the right to refuse to incorporate a company in the following instances:
1. If there is non-compliance with the provisions of CAMA or where the business which the
company is to carry on, or the objects for which it is formed, are illegal;
2. Ay of the subscribers to the memorandum is incompetent or disqualified in accordance with
Section 20 of the CAMA;
3. The name conflicts with or is likely to conflict with an existing trademark or business name
registered in Nigeria unless the consent of the owner of the trademark or name has been
obtained.
If the CAC refuses to register a company for any of the reasons stated above, any person
aggrieved by the refusal may give notice to the CAC requiring the CAC to apply to the Court for
directions and the CAC must within 21days of receiving the notice so apply. See Section 36(2) of
CAMA.
Certificate of Incorporation:
Once registration is completed, the CAC issues a Certificate of Incorporation. The certificate of
incorporation is prima facie evidence that all the requirements of the Act in respect of registration
and of matters precedent and incidental to it have been complied with and that the company is
authorized to be registered and duly registered under the Act. See section 36(6) of CAMA.
Effect of Incorporation
The general effect of incorporation is that from the date of incorporation, the subscribers of the
memorandum with such other persons as may from time to time become members of the
company, shall be a body corporate by the name contained in the memorandum, capable

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forthwith of exercising all the powers and functions of an incorporated company including the
power to hold land, have perpetual succession and a common seal, but with such liability on the
part of the members to contribute to the assets of the company in the event of its being wound up.
See Section 37 of CAMA.
Incorporated Trustees
This is a corporation formed by a class/association of persons bound together by custom, kinship,
nationality or any association for educational, literary, cultural or charitable purpose and not for
profit making. See Section 590 of CAMA.
The corporation appoints trustees (one of which will be the Chairman) and from the date of
registration, the trustees become a body corporate by the name prescribed in the Certificate of
Incorporation and shall have perpetual succession, common seal, legal capacity, and power to
hold and dispose land and enter into legally binding contracts. A secretary for the association shall
also be appointed.
The trustees must not be any of the following:
1. An infant
2. A person of unsound mind
3. An undischarged bankrupt or a person who has been convicted of an offence involving fraud
or dishonesty within five years of his proposed appointment. See Section 592(1) of CAMA.
Procedure for registering an Incorporated Trustees:
A search is carried out to confirm the availability of the proposed name. If the name is available,
an application is made to CAC, stating the proposed name, which must contain the words
“Incorporated Trustees of”, with the following documents attached:
1. Two passport photographs of each Trustee;
2. Two printed copies of the constitution of the association;

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3. 1 duly signed copy of the minutes of the meeting appointing the trustees and authorizing the
application, showing the people present and the votes scored;
4. The impression or drawing of the proposed common seal of the association.
5. Three newspaper adverts, 2 in a national newspaper and one in a local newspaper.
6. Photocopy of valid means of identification of the Trustees and Secretary of the association.
Foreign Investment in Nigeria
Non-Nigerians and Foreign Companies are at liberty, and indeed encouraged to invest and
participate in the operation of any enterprise or company in Nigeria. To invest in Nigeria, the
promoters or investors must register a company in Nigeria.
A foreign company may apply in accordance with Section 56 of CAMA for exemption from
incorporating a local subsidiary if such a foreign company belongs to one of the following
categories:-
1. Foreign companies invited to Nigeria by or with the approval of the Federal Government of
Nigeria to execute any specified individual project;
2. Foreign companies which are in Nigeria for the execution of a specific individual loan project
on behalf of a donor country or international organization;
3. Foreign government-owned companies engaged solely in export promotion activities, and;
4. Engineering consultants and technical experts engaged on any individual specialist project
under contract with any of the Governments in the Federation or any of their agencies or with
any other body or person, where such contract has been approved by the Federal Government.
A foreign company or investor may incorporate a Nigerian branch or subsidiary of the parent
company by giving a Power of Attorney to a qualified solicitor in Nigeria for this purpose. The
incorporation documents in this instance would, disclose that the Solicitor is merely acting as an
"agent" of a "principal" whose name(s) should also appear in the document. The Power of
Attorney shall indicate that the appointed Solicitor shall cease to function upon the conclusion of
all registration formalities.

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The minimum share capital of a company with foreign investment is N 10 million and where the
foreigner is resident in Nigeria, he shall submit/file a copy of his residence permit along with other
documents required for incorporation of a company.
Sequel to registration of the Company at the CAC, all companies with foreign investors must
register with Nigerian Investment Promotion Commission (NIPC) and obtain a Business Permit
from the Ministry of Internal Affairs through the NIPC before commencing formal operations.
Section 8(1) (b) of the Immigration Act provides that no person other than a Nigerian citizen shall
on his own account or in partnership with any other person practice a profession or establish or
take over any trade or business whatsoever or register or take over any company with limited
liability for any such purpose without the written consent of the Minister of Internal Affairs. A
Business Permit is the operational licence granted to an expatriate or foreign company to enable
him carry on business activities in Nigeria.
Registration with the NIPC and application for Business Permit is processed by completing the
NIPC application form accompanied with the following documents: –
1. Original copy of the treasury receipt for the purchase of NIPC Form.
2. A copy of the Certificate of Incorporation.
3. A copy of the Tax Clearance Certificate of the applicant company.
4. A copy of Certificate of Capital Importation
5. Certified True Copies of CAC Form 02 & 07 i.e. Particulars of Shareholders and Directors.
6. Certified True Copy of the Memorandum and Articles of Association;
7. A copy of treasury receipt as evidence of payment of stamp duties on the authorised share
capital of the company
8. A copy of the Joint-Venture Agreement between the Nigerian Partners and Foreigners
9. A Copy of Feasibility Report and Project Implementation Programme. (Business Plan)
10. A copy of Deed of Sub-Lease/Agreement evidencing firm commitment to acquire requisite
business premises for the company’s operation;

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11. Profile of Foreign Investor as testimony of international expertise and credibility of the foreign
partner in the proposed line of business.
If the foreign company intends to employ expatriates, an application shall be made to the Ministry
of Internal Affairs to obtain Expatriate Quota. The Expatriate Quota is the official approval
granted to a company to enable it employ individual expatriates to specifically designated jobs
and the quota must state its duration. Section 8(1) (a) of the Immigration Act provides that “no
person other than a citizen of Nigeria shall accept employment, not being employment with the
Federal or a State Government, without the approval of the Chief Federal Immigration Officer.
There are two types of expatriate quotas which are:
 Permanent until Reviewed (PUR) – This is meant for positions that would be occupied on a
permanent basis and is usually granted to the Chairman of the Board of a company or the
Managing Director. As the name implies, it is permanent until there is a supervening
circumstance, which will necessitate its review. The essence of granting the PUR is to
ensure that the foreign company is able to protect its investment. Once a PUR is granted, a
certificate is issued stating the position that the PUR covers.
 Temporary Quota – This is usually granted to the directors or other employees of the
company. These positions are specifically stated on the permit and the expatriate
employee’s qualification must be in par with the designation.
Please note that the quota is issued to the company and not the expatriate, as such when the
expatriate leaves the company, the position reverts to the company and the company may place
another expatriate on the same position for as long as the quota position remains valid.
To apply for Expatriate Quota Position, in addition to the documents submitted for the application
for Business Permit, the following additional documents and information are needed:
1. Evidence of non-availability of expertise in the country;

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2. A copy of training programme or personnel policy of the company, incorporating
management succession schedule for qualified Nigerians;
3. Particulars of names, addresses, nationalities and occupations of the proposed directors of the
company;
4. Job title designations of expatriate quota positions required, and the academic and working
experience required for the occupants of such positions.
Once the expatriate quota is obtained, the Company shall apply to the Nigerian embassy or
consular office for a subject to regularisation for residence work permit (STR) Visa in writing,
confirming that there is a vacancy on the expatriate quota and stating the position in which
prospective employee is to be employed and confirming acceptance of immigration responsibility.
STR visa is normally given for 90 days without reference, during which an application must be
made to the Comptroller-General of Immigration, to regularise the stay of the prospective
employee, and the person may assume his employment only when such application is approved
and a RESIDENCE WORK PERMIT granted.
Representative Offices
A foreign registered company can set up a Representative Office in Nigeria however such an
office cannot engage in business. It can only serve as a promotional point and must be registered
with the CAC.
LICENSING & REGULATORY APPROVALS
National Electricity Regulatory Commission (NERC)
NERC governs and regulates the power sector business in Nigeria. Section 62 of the Electric Power
Sector Reform Act 2005 provides that any person intending to engage in the business of electricity
generation, transmission, system operation, distribution or trading shall be required to obtain an
operator's licence from NERC.

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National Office of Technology Acquisition and Promotion (NOTAP)
NOTAP is vested with the responsibility to promote investments of foreign technology in and
outside Nigeria; assist incoming and existing investors by providing support services; and
promote investments in and outside Nigeria through effective promotional means.
Every contract or agreement entered into by any person in Nigeria with another person outside
Nigeria (foreigner) involving the transfer of foreign technology to Nigerian partners shall be
registered with NOTAP not later than 60 days from the execution of the agreement
The following companies are exempted by Section 56 (1) of CAMA from registering their contracts
with NOTAP:
1. A foreign company invited to Nigeria by or with the approval of the Federal Government to
execute a specified individual project;
2. A foreign company which is in Nigeria for the execution of a specific individual loan project on
behalf of the donor organisation or agency.
3. A foreign government-owned company engaged solely in export promotion activities.
4. Engineering consultants and technical experts engaged on any individual specific project under
contract with any of the governments of the Federation or any of their agencies or with any
person where the Government has approved such contract.
Nigerian Export Promotion Council (NEPC)
NEPC is responsible for issuing licenses to companies engaged in the business of export in
Nigeria. A license is obtained by paying the requisite fees and filling the requisite application form
accompanied with Certificate of registration/incorporation of the Applicant and the Memorandum
and Articles of Association of Applicant Company.
Nigerian Communications Commission (NCC)
NCC is the independent National Regulatory Authority for the telecommunications industry in
Nigeria and issues licenses for different types of tele-communications business.

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Nigerian Civil Aviation Authority (NCAA)
This is the regulatory body for aviation in Nigeria and it regulates and issues licenses to
companies that wish to carry on business in the aviation industry. NCAA issues a range of
licenses for various professionals as well as activities in the aviation industry which include:
1. Pilot licenses
2. Airline Transport pilot licence (ATPL)
3. Flight engineer licence.
4. Flight dispatcher licence.
5. Flight instructor licence.
6. Ground instructor licence.
7. Aircraft maintenance engineer licence.
8. Aviation repair specialist licence.
9. Parachute rigger licence.
10. Air traffic controller licence.
11.Aeronautical station operator licence.
12.Air traffic safety electronics personnel licence.
13.Cabin crew licence.
14.Flight radio telephony operator’s restricted licence.
Nigerian Agency for Food Drugs Administration and Control (NAFDAC)
NAFDAC is responsible for ensuring that no processed food is manufactured, imported, exported,
advertised, sold or distributed in Nigeria, without its approval. NAFDAC registers products in 2
main categories i.e. Food and Drugs (medical devices and vaccines as well).
For products manufactured in Nigeria, an application for registration shall be made by the
Nigerian manufacturer while for imported products, an application for registration shall be made
by a Nigerian representative of the foreign manufacturer who shall furnish a duly executed Power
of Attorney from the manufacturer (appointing and authorizing him to act in that capacity and
specifying the name(s) of the product(s)). An applicant is required to furnish NAFDAC with

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evidence of registration of a trade mark bearing the name of the product. If the registration of the
trademark is not completed, the applicant must furnish a notification of acceptance of the trade
mark application issued by the Registrar of Trade Marks.
NAFDAC also monitors labeling of products. The following minimum requirements must appear
on the label:
1. Name of product- brand name or common name in bold letters;
2. Full location and address of the manufacturer;
3. Batch number, date of manufacture and best before date;
4. Net content of essential ingredients in metric weight units in case of solid, semi-solid and
aerosols and metric volume in case of liquids;
5. In case of food, ingredients must be listed by their common names in order of their
predominance by weight unless the food is standardized, in which case the label must include
only those ingredients which the standard makes optional;
6. Food additives and colours must be declared on the label.
Standards Organisation of Nigeria (SON)
SON is responsible for ensuring that locally manufactured products in Nigeria meet the required
degree of satisfaction to consumers through compliance with Government policies on
standardisation and conformity assessment. SON also ensures that goods imported into Nigeria
meet the minimum requirements of Nigeria Industrial Standards (NIS) or any other approved
international standards. The main aim of SON is to promote global competitiveness among
domestic manufacturers and encourage continual improvement on the quality of products.
In achieving its aim, SON does the following:
1. Determine minimum standards requirements relating to products, measurements, materials
and processes; certification of industrial products, amongst others.

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2. Operates a certification Scheme whereby manufacturers whose products meet the requirement
of NIS are issued with permits to use the Certification Mark or the Nigerian "Mark of quality"
as issued by SON.
Product registration with SON can be done online however original copies of documents will be
sighted at SON office for authentication.
Pharmacists Council of Nigeria (PCN)
PCN is a Federal Government Agency established and charged with responsibility of regulating
and controlling the education, training and practice of pharmacy in all aspects. The PCN regulates
the activities/business of Pharmaceutical Technicians and Patent and Proprietary Medicine
Vendors in Nigeria. PCN’s functions include:
1. Determining the standards of knowledge and skills to be acquired by persons seeking to
become members of the Pharmacy profession and reviewing those standards from time to time
as circumstances may require;
2. Establishing and maintaining the registers of persons entitled to practice as members of the
profession and the publication from time to time, of lists of those persons;
3. Reviewing and preparing from time to time, the Code of Conduct desirable for the practice of
Pharmacy;
4. Inspection, approval and licensing of premises where pharmaceutical activities take place and
these include manufacturing, importation, Mega/State Drug Distribution centers, Distribution,
wholesale and retail premises, hospital, pharmacies and Patent and proprietary Medicines
Vendors’ Premises;
5. Registration and Issuance of annual permits to Pharmacy Technicians; and
6. Organizing Mandatory Continuing Professional Development (MCPD) for Pharmacists.
Manufacturers Association of Nigeria (MAN)
MAN is a national industrial association serving and representing companies in the
manufacturing, construction and service sectors of the national economy. It was established out of

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the need to have a focal point of communication and consultation between the manufacturers on
the one hand, and the government and general public on the other.
Its aim is to create an environment where manufacturers can operate efficiently and profitably for
the benefit of all and to promote and protect the collective interests of manufacturers.
Medical Laboratory Science Council of Nigeria
The Council regulates the practice of medical laboratory science through its Board by issuing
directives to laboratory scientists who are registered and enrolled as members of the Council.
Membership is conferred upon applicants upon application provided such applicants have passed
the examination prescribed for the qualifying status in any institution approved for the purpose
by the Board, and completed the practical training prescribed or completes the internship
prescribed; or the applicant holds the equivalent qualification granted outside Nigeria and for the
time being accepted by the Board, provided the Applicant can satisfy the Board that he has
sufficient practical experience as a scientist.
Applicants may also be required to satisfy the Board that they have attained the age of 18 and are
of good character.
The Board has the power to approve institution that provide qualification trainings for applicants
and also has the power to withdraw approval or accreditation previously given in respects of any
course, qualification or institution. There is a disciplinary committee of the Council charged with
the responsibility of considering and determining any case referred to it by the investigation
panel.
INTELLECTUAL PROPERTY RIGHTS
The World Intellectual Property Organization (WIPO) defines Intellectual Property as “…creation
of the mind, inventions, literary and artistic works and symbols, names, images and designs in
commerce”.

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The 9th Edition of the Black’s Law Dictionary defines it as “A category of intangible rights
protecting commercially valuable products of the human intellect. The category comprises
primarily trademark, copyright and patent rights, but also include trade-secrets rights, publicity
rights, moral rights, and rights against unfair competition.” “A commercially valuable product of
the human intellect, in a concrete or abstract form, such as a copyrightable work, a protectable
trademark, a patentable invention or a trade secret.”
It is the creation of the mind, manifested or interpreted in a form that has a physical existence and
possesses exclusive property rights recognized by the corresponding fields of law. Under
intellectual property law, owners are granted certain exclusive rights to a variety of intangible
assets, such as musical, literary and artistic works, discoveries and inventions, words, phrases,
symbols and designs, etc., barring any use of the work by other persons without the owner’s prior
consent.
Intellectual Property Rights overlap other areas of law like contract law and tort law. There are
several laws governing intellectual property protection in Nigeria. These laws include: Nigerian
Copyright Act; Patents and Designs Act and Trade Marks Act.
Nigeria has also ratified several treaties relating to the protection of intellectual property and has
assumed additional responsibilities by virtue of its membership in the World Intellectual Property
Organisation (WIPO) and the World Trade Organization WTO.
Copyright
Copyright protects original creations in the literary and artistic fields which are fixed in medium
from which they can be reproduced, or otherwise communicated. Works eligible for Copyright
under Section 1 of the Copyright Act are:
1. Literary works (novels, stories, poetical works, plays, computer programmes, letters,
encyclopedias, law reports, etc.);

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2. Artistic works (paintings, drawings, maps, plans, woodcuts, works of architecture,
sculpture, craftsmanship, etc.);
3. Musical works (musical notations and compositions);
4. Cinematograph Films;
5. Sound recordings;
6. Broadcasts
Titles, ideas, plans, computer programs, concepts, procedures, methods, systems, devices or
things of similar nature (as distinguished from the manner in which they are expressed or
described in writing) are not protected by Copyright. What this means in effect is that although
copyright protects the literal expression of computer programs etc., it does not protect the ideas
underlying the computer program etc., which often have considerable commercial value.
The rights which an author or copyright owner enjoys in a work include the right to be
acknowledged in any use made of his work and also to prevent any derogatory use; alteration;
distortion or mutilation of same (referred to as moral rights). More importantly, the author or
owner enjoys the right to earn money from his work by determining the condition under which
the work may be commercially used by a third party (economic rights). Without the consent of the
copyright owner or assignment of the copyright, the reproduction, public performance, recording,
broadcasting, adaptation of the work is prohibited by law and the copyright owner has recourse to
legal remedies against persons infringing on his copyright.
Copyright protection is essentially territorial in nature. By virtue of membership of certain
international copyright treaties and conventions, works of Nigerian citizens enjoy protection in
territories of member countries of such treaties to which Nigeria is a party.

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Registration Procedure
Copyright registration is done at the Nigerian Copyright Commission (NCC) by paying the
registration fees and completing an application Form with 2 copies of the work to be protected.
The registration can be done manually or online via the Commission’s e-registration website.
Trademarks
A trademark is a recognizable and distinct sign, design, or unique expression used to identify and
distinguish a brand of products/services from other brands. The trademark owner can be an
individual, business organization, or any legal entity. Section 67 of the Trade Marks Act defines
trademark as follows:
“trade mark” means, except in relation to a certification trade mark, a mark used or proposed to
be used in relation to goods for the purpose of indicating, or so as to indicate, a connection in the
course of trade between the goods and some person having the right either as proprietor or as
registered user to use the mark, whether with or without any indication of the identity of that
person, and means, in relation to a certification trade mark, a mark registered or deemed to have
been registered under section 43 of this Act”
Under the Trade Marks Act, a trademark may consist of the following:
1. The name of a company, individual, or firm, represented in a special or particular manner;
2. The signature of the applicant for registration or some predecessor in his business;
3. An invented word or invented words;
4. A word or words having no direct reference to the character or quality of the goods, and not
being, according to its ordinary signification, a geographical name or a surname;
5. Any other distinctive mark:
Under the Act, it is unlawful to the register the following as a trademark or part of a trade mark:
1. Deceptive or scandalous matters
2. Names of chemical substances
3. Identical and resembling trademarks

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Procedure for registration of trade marks
A local Attorney/Agent in Nigeria is instructed to file an application for registration at the Trade
Marks, Patents & Designs Registry in Nigeria. A Power of Attorney/Authorization of Agent Form
would be executed authorizing the agent to act for the Applicant. The local Agent remains
responsible for processing registrations of the marks, defending oppositions (if any), renewals etc.
A local Agent/Attorney may be replaced or substituted by executing another Power of
Attorney/Authorization of Agent Form in favor of the succeeding Agent. No formal notices are
necessary and the Agent with the most recent Authorization is deemed to be the one with powers
to act thenceforth.
The documents required to process a trademark application are:
1. An application letter to the trademark Registrar stating the full name(s), nationality and
physical address of the Applicant.
2. 1 Trademark Registry Form 2, authorizing a lawyer/agent to register the mark.
3. 1 Trademark Registry Form 3, on which 20 bromides, showing an exact or a clear and distinct
description/representation of the mark will be pasted. If it is to be filed online, soft copies are to
be provided in jpeg format at a minimum of 1200 dpi. A representation is preferred to have the
following dimensions: 120px by 100px (length by breath).
4. A duly notarized power of attorney from the owner of the mark simply signed, with full
particulars of name(s), address(es) and nationality of the applicant(s) and full name(s) and
capacity of the signatory when applicant is a firm/company.
5. The full range of goods covered or proposed to be covered by the trade mark. Nigeria presently
follows the International Classification of Goods.
A separate application is filed for each classification of goods for which the trade mark is to be
registered. A Trademark may be registered either plainly (black and white) or in colour, however,
where a trademark is registered in colour, the protection afforded the Trademark is limited to the
colour(s) registered. On the other hand, a plain black and white registration affords protection to
all colours of presentation of the trade mark.

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The procedure for registration is in 3 stages which are:
• Application-Acknowledgement:
When all documents for the registration have been compiled and filing fees paid, an
application is filed at the Trademarks Registry, after which an acknowledgement form is
issued by the Registry reflecting the official number and filing date of the application. A
preliminary search is conducted as to distinctiveness from existing and pending registrations.
The Registrar examines the application for registrability taking into consideration possible
conflicts with prior registered or pending marks and or inherent registrability of the mark. If
the Registrar finds the trademark acceptable for registration, the applicant will be furnished
with a letter/notice of acceptance.
• Acceptance-Publication:
After the application is acknowledged and accepted by the Registry, it is then published in the
Trademark Journal. Every trade mark application must be advertised in the Nigerian
Trademark Journal, and is open to opposition for a period of two (2) months from the date of
advertisement.
• Publication-Certification:
There is a 2 months allowance period after publication, within which the application may be
opposed, by any person. Where the mark remains unopposed or no objections are received
within the specified period or no objections are sustained, the Registrar will issue the applicant
with a certificate of registration. When issued, the Registration Certificate will reflect the date
of initial filing as date of registration (i.e. date of filing/ acknowledgement).
Trademark registrations in Nigeria are valid for 7 years and can be renewed for a further term of
14 years. An application for renewal should be made not less than three (3) months from the due
date.

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Patents
A Patent protects new inventions and covers how things work, what they do, how they do it, what
they are made of and how they are made. It gives the owner the right to prevent others from
making, using, importing or selling the invention without permission.
Section 1 (1) (a) & (b) of the Patents and Designs Act provides that an invention is patentable if it
is new, results from inventive activity and is capable of industrial application; or if it constitutes
an improvement upon a patented invention and also is new, results from inventive activity and is
capable of industrial application.
Section 1 (2) (a), (b) & (c) of the Act provides that an invention is new if (a) it does not form part of
the state of the art, (b) results from inventive activity if it does not obviously follow from the state
of the art, either as to the method, the application, the combination of methods, or the product
which it concerns, or as to the industrial result it produces; and (c) it is capable of industrial
application if it can be manufactured or used in any kind of industry, including agriculture.
Section 1 (4) of the Act further provides that Patents cannot be validly obtained in respect of-
(a) plant or animal varieties, or essentially biological processes for the production of plants or
animals (other than microbiological processes and their products); or
(b) inventions the publication or exploitation of which would be contrary to public order or
morality (it being understood for the purposes of this paragraph that the exploitation of an
invention is not contrary to public order or morality merely because its exploitation is
prohibited by law).
The Trademark & Patent Registry Nigeria on its website also lists the following as non-patentable:
Scientific or mathematical discovery, theory or method, a literary, dramatic, musical or artistic
work, a way of performing a mental act, playing a game or doing business, the presentation of
information, or some computer programs, an animal or plant variety, a method of medical
treatment or diagnosis.

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Another important criterion for a Patent to be registrable in line with Section 1 (3) of the Act is that
it must not have been published by oral disclosure, by document or prior use before applying for
registration. The only exception to this under the Act is if it was published in an official or
officially recognised international exhibition within the period of 6 months preceding the filing of
the application.
The procedure for Patent registration:
1. Patent application is made to the Registrar containing the applicant’s full name and address,
and if the latter is outside Nigeria, an address for service in Nigeria.
2. The application shall contain a petition or request for a patent signed by the applicant or his
agent.
3. It is the usual practice for Patents to be examined prior to registration to ascertain the
background history, i.e. as it relates to prior registration and original owner of patent.
4. The application must include a description/specification of the invention with drawings, plans
and pictures taken from all angles, all in duplicate.
5. When all documents have been filed and appropriate filing fees paid, the Registrar would
examine the application as to its conformity with the requirements for registration after which
he may reject the application or grant the patent.
6. Where appropriate, a declaration signed by the true inventor requesting that he be mentioned
as such in the patent and giving his name and address is required.
The documents required to process a Patent application are:
1. An application letter to the Patents Registrar
2. A signed power of attorney or authorization for your lawyer/agent to register the patent.
3. A description/specification of the relevant invention with appropriate plans and drawings.
4. If application is not made by the true inventor, a declaration by him giving his name and
address and requesting that he be mentioned in the patent.

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A patent shall expire at the end of the twentieth year from the date of the filing of the relevant
patent application. A patent shall lapse if the prescribed annual fees are not duly paid in respect of
it. A Grace period of six months shall be allowed for the payment of the fees and if the fees and
any prescribed surcharge are paid within that period, the patent shall continue as if the fees had
been duly paid.
Industrial Designs
The Patents and Designs Act defines Industrial Designs as any combination of lines or colours or
both, and any three-dimensional form, whether or not associated with colours if it is intended by
the creator to be used as a model or pattern to be multiplied by industrial process and is not
intended solely to obtain a technical result. An industrial design is registrable if-
1. It is new;
2. It is not contrary to public order or morality,
An industrial design is not new if, before the date of application for registration, it has been made
available to the public anywhere and at any time by means of description, use or in any other way,
unless it is shown to the satisfaction of the Registrar that the creator of the design could not have
known that it had been made so available. An industrial design shall not be deemed to have been
made available to the public solely by reason of the fact that within the period of six months
preceding the filing of the application for registration the creator exhibited it in an official or
officially recognised exhibition.
The right of registration of an industrial design is vested in the statutory creator i.e. the person
who, whether or not he is the true creator, is the first to file, or validly to claim a foreign priority
for, an application for registration of the design.
Procedure for registration
An application is made to the Registrar and shall contain-
1. A request for registration of the design;

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2. The applicant's full name and address and, if that address is outside Nigeria, an address for
service in Nigeria;
3. A specimen of the design or a photographic or graphic representation of the design with any
printing block or other means of reproduction from which the representation was derived;
4. An indication of the kind of product (or, where a classification has been prescribed, the class of
product) for which the design will be used ;
5. Payment of prescribed fee
6. Where appropriate, a declaration signed by the true creator requesting that he be named as
such in the Register and giving his name and address, and
7. If the application is made by an agent, a signed power of attorney (so however that,
notwithstanding any rule of law, legalization or certification of the signature of the power of
attorney shall be unnecessary).
A single application may relate to any number of industrial designs not exceeding fifty, if the
products to which the designs relate are of the same kind or, where a classification has been
prescribed, of the same class.
TAX REQUIREMENTS FOR DOING BUSINESS IN NIGERIA
In Nigeria, the regulatory bodies overseeing taxation of Companies and individuals are the
Federal Inland Revenue Service (FIRS) for tax levied by the Federal Government and the State
Inland Revenue Service for each state for tax levied by the State Governments.
Relevant Tax Laws and Regulations:
Companies Income Tax Act (CITA)
All Companies have their profit/income generally taxed under this Act (with the exceptions of
companies engaged in petroleum operations which are subject to taxation under the Petroleum
Profits Tax Act).

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Every Company is required immediately after incorporation to apply for a tax payer’s
identification number as well as VAT registration with the Federal Inland Revenue Services (FIRS)
for the purpose of remitting relevant taxes.
In accordance with the provisions of the Act, Companies are liable to pay 30% of their Annual
Profits as Tax to the Federal Government through FIRS. Nigerian companies engaged in
manufacturing or agricultural production, mining of solid minerals or wholly export trade with a
turnover of less than N 1,000,000.00 are liable to pay 20% of their Annual Profits as tax.
Company’s dividends and distributions are subject to tax at the rate 10% however dividends paid
in the form of bonus share or scrip shares to individual shareholders are not subject to tax. Where
a company is a shareholder in another company then such dividends are excluded from the
profits of the company for the purposes of computation of the tax.
Personal Income Tax Act (PITA)
The PITA regulates taxation of individuals, registered businesses and Partnerships. Individuals
are liable to pay tax on income earned in each year from a source inside or outside Nigeria,
including gain or profit from any trade, business, profession or vocation, salaries, wages, fees,
allowance or other gain or profit from employment including compensations, bonuses, premiums,
benefits or other perquisites allowed, given or granted by any person to an employee.
Income exempted from taxation includes:
1. Reimbursement to an employee for expenses incurred by him in the performance of his duties,
and from which it is not intended that the employee should make any profit or gain;
2. Medical or dental expenses incurred by an employee;
3. The cost of any passage to or from Nigeria incurred by an employee;
4. Sums paid in respect of the maintenance or education of a child
5. National Pension Scheme
6. Retirement gratuities
7. National Health Insurance Scheme contributions

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8. Life Assurance Premium
Pay As You Earn (PAYE) Regulations
Under these regulations, all employers are required to register with the relevant tax authority for
the purposes of deducting income tax from employees’ remuneration and remit same to the
relevant tax authority.
Employers are also required to send returns at the end of each tax year in respect of each
employee showing the total emoluments of each employee during the year, the tax relief, if any,
and the total tax deducted from the employee.
Failures to make deductions, remit tax, file returns and provide records for inspection all attract
fines. Regulations 16-18 provide as follows: Employers of labour are deemed to be agents of the
tax authority for the purposes of remitting taxes deducted from salaries due to employees.
Value Added Tax (VAT) Act
In accordance with the provisions of the Act, VAT is charged at the rate of 5 % on certain goods
and services payable to the FIRS. Taxable persons (individuals and businesses) are required to
register with the FIRS within 6 months of commencement of business. Section 8 of the Act
provides thus:
A non-resident company that carries on business in Nigeria must also register for the tax with the
FIRS using the address of the person with whom it has a subsisting contract, as its address for
purposes of correspondence relating to the tax.
Taxable persons are required to keep records and books of all transactions, operations, imports
and other activities for the purpose of ascertaining amount due as tax and are to render monthly
returns to the FIRS. Failure to render monthly returns attracts a penalty of 5% plus interest at the
commercial rate.

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Taxable persons are mandated to issue invoices for goods sold or services rendered and failure to
do so attracts a fine. Also a taxable person is required to notify FIRS of any change in its address
and failure to do so make the person subject to a fine.
A taxable person who fails to collect VAT and remit same is liable to pay as penalty 150% of the
amount not collected, plus 5% interest above the Central Bank of Nigeria rediscount rate.
Goods exempted from VAT:
1. All medical and pharmaceutical products.
2. Basic food items.
3. Books and educational materials.
4. Baby products.
5. Fertiliser, locally produced agricultural and veterinary medicine, farming machinery and
farming transportation equipment.
6. All exports excluding non-oil exports which enjoy zero rated status.
7. Plant, machinery and goods imported for use in the export processing zone or free trade zone
8. Plant, machinery and equipment purchased for utilisation of gas in down-stream petroleum
operations provided that 100 per cent production of such company is for export otherwise tax
shall accrue proportionately on the profits of the company.
9. Tractors, ploughs and agricultural equipment and implements purchased for agricultural
purposes.
Services exempted from VAT:
1. Medical services.
2. Services rendered by Community Banks, People’s Bank and Mortgage Institutions.
3. Plays and performances conducted by educational institutions as part of learning.
4. All exported services excluding non-oil exports which enjoy zero rated status.

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Capital Gains Tax Act
Under the Capital Gains Act, tax is payable by both companies and individuals on capital gain
accrued from disposal of assets. Corporate bodies remit to the FIRS while individuals remit same
to the relevant tax authorities in their states.
The tax is charged at the rate of 10% on the difference between the cost of the asset and the
consideration received on disposal of the asset i.e. tax is chargeable on the gain and if there is no
gain, no tax can be charged. The gain referred to here is not limited to cases of disposal of
property real or corporeal; it includes capital derived from the following:
Sale, lease, transfer, an assignment, a compulsory acquisition or any other disposition of assets,
notwithstanding that no asset is acquired by the person paying the capital sum, and in particular–
a) where any capital sum is derived by way of compensation for any loss of office or
employment;
b) where any capital sum is received under a policy of insurance and the risk of any kind of
damage or injury to, or the loss or depreciation of, assets;
c) where any capital sum is received in return for forfeiture or surrender of rights, or for
refraining from exercising rights;
d) where any capital sum is received as consideration for use or exploitation of any asset; and
e) without prejudice to paragraph (a) of this section, where any capital sum is received in
connection with or arises by virtue of any trade, business, profession or vocation.
Stamp Duties Act (SDA)
Under the SDA, tax is imposed on instruments and legal documents generally. Instrument as used
in the SDA includes every written document.
The Federal government is the competent authority to impose, charge and collect duties upon
instruments relating to matters executed between a company and an individual, group or body of
individuals while the State Governments collect duties in respect of instruments executed between

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persons or individuals at such rates to be imposed or charged as may be agreed with the Federal
Government.
The rate chargeable is dependent on the classification of the document. Some documents attract
stamp duties on flat rate basis while others are assessed individually. For example stamp duty on
the statement of the share capital of a company is at the rate of 7.5% of the share capital while the
stamp duty charged on the Memorandum & Articles of Association is the sum of N 1,000.
Education Tax Act
Under the Education Tax Act, all companies registered in Nigeria are to pay to the FIRS an annual
education tax which shall be at the rate of two per cent of the assessable profit of the company.
This a social responsibility demanded of all companies in Nigeria as their contribution to the
development of education in Nigeria.
The Industrial Training Fund Act (ITFA)
Under the ITFA, an Industrial Training Fund (ITF) is established to be utilized to promote and
encourage the acquisition of skills in the industrial sector with a view to generate indigenous
trained manpower sufficient to meet the needs/demands of the economy. The tax is charged at the
rate of1% on employers with 5 or more employees or with an annual turnover of N 50,000,000.
Petroleum Profits Tax Act (PPTA)
Under the PPTA, all companies engaged in the extraction and transportation of petroleum are
liable to pay tax. Tax is charged on the proceeds from the sale of oil and related substances plus
any other income of the company incidental to and arising from its petroleum operations.
The taxable income of a petroleum company is subject to tax at 65.75% during the first 5 years of
operation and increases to 85% afterwards. Oil companies who operate under production sharing
contracts are taxed at the rate of 50%. There are however some concessions granted to petroleum
companies which shall be discussed under Tax Incentives and Allowance.

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Withholding Tax
Withholding Tax is an advance payment of income tax which may be used to offset or reduce tax
liability of the year of assessments i.e. where a payment is due from one person to another, the
person making the payment is expected to deduct tax at the applicable rate and remit it to the
relevant tax authority. The remittance should be done not later than 30 days after the deduction.
The obligation to withhold tax is provided for in the PITA, CITA and PPTA respectively.
Withholding tax is usually at the rate of 5 % or 10% depending on the transactions or services as
detailed below:
TRANSACTIONS COMPANIES (%) INDIVIDUALS (%)
Royalties 10 5
Contract of Supplies 5 5
Contract of Construction 5 5
Dividend 10 10
Technical Service 10 5
Professional Service 10 5
Consultancy 10 5
Management Service 10 5
Commission 10 5
Rent 10 10
Interest 10 10
Hire, Charter, Lease 10 10
Directors fees 10 10
Transactions exempted from Withholding Tax:
1. Direct purchase across the counter;
2. Direct purchase of raw materials from supplier as distinct from contract of supplies.
3. Sale in the ordinary course of business.
4. All imported goods.

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5. Inter- bank interest.
6. Income exempted from income tax
7. Claims in insurance business
8. Interest on Bonds
9. Dividends redistributed by Holding Companies
TAX INCENTIVES
A wide range of incentives and reliefs have been designed by the Federal government to boost
industrial and agricultural production for export. These will be discussed below.
Pioneer Status
The Industrial Development (Income Tax Relief) Act provides for the grant of Pioneer Status. The
objective of granting Pioneer status is to enable the business concerned to make a reasonable level
of profit within its formative years in order for same to be ploughed back into the business. It is a
tax holiday granted to eligible industries for a period of three years in the first instance and may
be extended to a further period of two years. The investment must be in respect of industry or
products designated as pioneer, for example, agro-allied or export goods and solid minerals.
Pioneer Status Incentive Regulations 2014 sets out the objective and scope, as well as
processes/procedures guiding the application and issuance of the pioneer status incentive with the
NIPC. To qualify for pioneer status, the applicant must be a body corporate, registered in Nigeria
and must have incurred capital expenditure of not less than N10 million.
The application for Pioneer status is to be submitted within a year of commencement of
production by the applicant. The Applicant shall pay 2% service charge from its estimated tax
savings, derived from the five-year financial projections which is required to be submitted to
NIPC. Where an applicant records losses in its projections, the service charge will be calculated on
the higher of either 0.5% of its net assets or 0.25% of its turnover.

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Some of the businesses eligible for Pioneer status are – mining of solid minerals, rubber plantation
and processing, real estate development and utilities, manufacture of cement, pharmaceutical,
iron and steel from iron ore, gas cylinders, solar energy powered equipment and gadgets and
maintenance of aircrafts.
Double Taxation Agreements/Treaties
CITA provides for relief from payment of double taxation if there are bilateral agreements with
other countries. The objective of this is to ensure that the tax payable in Nigeria on the profits of a
Nigerian company being remitted into the country are reduced by the amount of “foreign Tax”
paid abroad and vice versa i.e. it affords relief from double taxation.
Rural Investment Allowance
Where a company incurs capital expenditure on the provisions of facilities such as electricity,
water, tarred road or telephone for the purpose of a trade or business which is located at least 20
kilometers away from such facilities provided by the government, there shall be allowed to the
company a rural investment allowance. Where a rural investment allowance has been given no
investment allowance shall be due or be given in respect of the same asset or in addition to the
allowance.
The rural investment allowance is made against the profits of the year in which the date of
completion of the investment falls and the allowance or any fraction thereof, is not available for
carry forward to any subsequent year and whenever full effect cannot be given to the allowance
owing to there being no assessable profits or assessable profits less than the total allowance for the
year the investment was made.
Export Processing Zone
A company which has incurred expenditure in its qualifying building and plant equipment in an
approved manufacturing activity in an export processing zone shall be granted 100 per cent

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capital allowance in any year of assessment. A company granted capital allowance shall not be
entitled to an investment allowance.
The profit or gains of a 100 per cent export oriented undertaking established within and outside
an export free zone shall be exempt from tax for the first three consecutive assessment years
provided that‐
1. the undertaking is 100 per cent export oriented;
2. the undertaking is not formed by splitting or breaking up or reconstructing a business already
in existence;
3. it manufactures, produces and exports articles during the relevant year and the export proceeds
form 75 per cent of its turnover;
4. The undertaking is not formed by transfer of machinery or plants previously used for any
purpose to the new undertaking or where machinery or plant previously used for any purpose
is transferred does not exceed 25 per cent of the total value of the machinery or the
undertaking;
5. The undertaking repatriates at least 75 per cent of the export earnings to Nigeria and places it
in a domiciliary account in any registered and licensed bank in Nigeria.
Gas Industry Incentives
A company engaged in gas utilisation (downstream operations) shall be granted the following
incentives:
1. An initial tax‐free period of three years which may, subject to the satisfactory performance of
the business, be renewed for an additional period of two years;
2. As an alternative to the initial tax free period of 3 years, an additional investment allowance of
35 per cent which shall not reduce the value of the asset. A company which claims this
incentive shall not be eligible for the incentive provided in 3 (ii) below.
3. Accelerated capital allowances after the tax‐free period, as follows ‐
(i) an annual allowance of 90 per cent with 10 per cent retention, for investment in plant and
machinery;

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(ii)an additional investment allowance of 15 per cent which shall not reduce the value of the
asset;
4. Tax free dividends during the tax free period, where‐
(i) the investment for the business was in foreign currency; or
(ii) the introduction of imported plant and machinery during the period was not less than 30
per cent of the equity share capital of the company;
5. Interest payable on any loan obtained with the prior approval of the Minister for a gas project,
shall be tax deductible.
The tax‐free period of a company shall start on the day the company commences production as
certified by the Ministry of Petroleum Resources.
Gas utilisation" means the marketing and distribution of natural gas for commercial purposes and
includes power plant, liquified natural gas, gas to liquid plant, fertiliser plant, and gas
transmission and distribution of pipelines.
Duty Drawback and Suspension Scheme
The Customs and Excise Management Act and the Customs Duty Drawback Scheme/Regulation
provides for the refund of import duties on the following:
1. Raw materials including packaging materials used in manufacturing goods that are exported.
2. Paper used for the manufacture of goods supplied for educational purposes to educational
establishments recognized by the Federal Adviser on Education.
3. Goods exported in the same state as that in which they were imported.
Exemption from Capital Gains Tax
The following societies/ institutions are exempted from Capital Gains Tax provided the gain is not
derived from any disposal of any assets acquired in connection with any trade or business carried
on by the institution or society and the gain is applied purely for the purpose of the institution or
society:

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1. An ecclesiastical, charitable or educational institution of a public character;
2. Any statutory or registered friendly society;
3. Any co-operative society registered under the Co-operative Societies Law of any State; or
4. Any trade union registered under the Trade Unions Act,
In-Plant Training Tax Concession
Industrial establishments that have set up in–plant training facilities enjoy a two percent tax
concession for a period of five years.
Investment in Infrastructure Incentive
Industries that provide infrastructural facilities which ought to be provided by the Government
such as access to roads, pipe borne water and electricity. Twenty percent (20%) of the cost of
providing these infrastructural facilities, where they do not exist, is tax deductible.
Investment in Economically Disadvantaged Areas
A pioneer industry sited in economically disadvantaged Local Government Area is entitled to
100% tax holiday for seven years and an additional 5% capital depreciation allowance over and
above the initial capital depreciation allowance.
Other industries or sectors that enjoy tax concessions/incentives include:
 Industries with high labour/capital ratio i.e. industries with plants, equipment and
machinery, which are essentially operated with minimal automation.
 Engineering industries, where some finished imported products serves as inputs.
 Companies engaged in manufacturing which incur capital expenditure for the purposes of
Expansion of production capacity, Modernization of production facilities and
Diversification into related products enjoy re-investment capital allowance.
 Agro- allied, Engineering, Chemical and Petrochemical industrial companies that attain the
minimum level of local raw material sourcing and utilization.
 Companies with turnover of less than N1 million in the manufacturing business.

40
OLUYEMISI O. DANSU
 Companies in the agro-allied business do not have their capital allowance restricted. It is
granted in full i.e. 100%.
 Solid Minerals sector
 Petroleum companies that are into joint ventures with the Nigerian National Petroleum
Corporation and have signed Memorandum of Understanding.
 Gas Industry
 Telecommunications
 Energy/Electricity
 Tourism
 Transport
 Export Industry
 Export Manufacturers
Corporations and Companies exempted from Taxation:
The following are exempted from Taxation:
1. The profits of any company being a statutory or registered friendly society, in so far as such
profits are not derived from a trade or business carried on by such society;
2. The profits of any company being a co‐operative society registered under any enactment or law
relating to co‐operative societies, not being profits from any trade or business carried on by that
company other than co‐operative activities solely carried out with its members or from any
share or other interest possessed by that company in a trade or business in Nigeria carried on
by some other persons or authority;
3. The profits of any company engaged in ecclesiastical, charitable or educational activities of a
public character in so far as such profits are not derived from a trade or business carried on by
such company;
4. The profits of any company formed for the purpose of promoting sporting activities where
such profits are wholly expendable for such purpose, subject to such conditions as the Board
may prescribe;

41
OLUYEMISI O. DANSU
5. The profits of any company being a trade union registered under the Trade Unions Act in so far
as such profits are not derived from a trade or business carried on by such trade union;
6. Dividends distributed by Unit Trust;
7. The profits of any company being a body corporate established by or under any Local
Government Law or Edict in force in any State in Nigeria;
8. The profits of anybody corporate being a purchasing authority established by an enactment
and empowered to acquire any commodity for export from Nigeria from the purchase and sale
(whether for the purposes of export or otherwise) of that commodity;
9. The profits of any company or any corporation established by the law of a State for the purpose
of fostering the economic development of that State, not being profits derived from any trade
or business carried on by that corporation or from any share or other interest possessed by that
corporation in a trade or business in Nigeria carried on by some other person or authority;
10. Any profits of a company other than a Nigerian company which, but for this paragraph, would
be chargeable to tax by reason solely of their being brought into or received in Nigeria;
11.Dividend, interest, rent, or royalty derived by a company from a country outside Nigeria and
brought into Nigeria through Government approved channels. Government approved channels
means the Central Bank of Nigeria, any bank or other corporate body appointed by the
Minister as authorised dealer under the Foreign Exchange (Monitoring and Miscellaneous
Provisions) Act or any enactment replacing that Act;
12. The interest on deposit accounts of a foreign non‐resident company provided that the deposits
into the account are transfers wholly of foreign currencies;
13.The interest on foreign currency domiciliary account in Nigeria.
In conclusion, it is very important before embarking on any business venture to familiarize with
all the relevant laws and regulations in order to comply with same and also enjoy the benefits of
tax incentives as it relates to the industry.

NUTS & BOLTS OF INCORPORATING A BUSINESS IN NIGERIA

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