DOING BUSINESS IN NIGERIA
Since 2003, Healy Consultants has assisted both global entrepreneurs and multinationals with company registration solutions in Nigeria. Services provided by our experts include i) business registration in Nigeria ii) license registrations iii) assistance to find joint venture partners iv) corporate bank account opening v) work visa application vi) human resource strategies and vii) office rental solutions.
Press the link headings below to read detailed, relevant, up to date information.
Advantages and Disadvantages
Advantages of Nigeria company registration
- Tax exemption through Special Economic Zones
- The country boasts 14 operational special economic zones, offering foreign companies registering a new business in Nigeria several incentives including i) a tax holiday on all taxes including federal, state, and local government taxes ii) duty free import and iii) 100% repatriation of capital, profits, and dividends;
- These zones allow companies to export manufactured products to foreign markets. Such companies are also exempt from all import and export licensing and all expatriate quotas, and one-stop approval is available for permits, operating licenses, and incorporation;
- Registering a Nigerian company in a special economic zone also allows our Clients to sell their goods into the domestic Nigerian market, provided import duty is paid on manufactured goods sold domestically;
- Land is rent-free for the first 6 months, for any construction project undertaken in the zone.
- A rapidly growing business environment
- Because it sits on the 8th largest proven oil and gas reserves on the planet according to OPEC world crude oil reserves 2014, Nigeria has the 3rd highest projected GDP growth rate in Africa at 7%, and 7th in the world. This is a super attractive location for foreign investors to register their company in Nigeria;
- The Nigerian banks possess cheap assets, with an average price/earnings ratio of just 5.92. Coupled with recent reforms designed to improve security and reliability, the financial sector is an attractive investment opportunity;
- The government has recently made the development of physical and industrial infrastructure a priority, with several large-scale projects. Investors can expect dramatic improvements in the quality of transportation, communications, electricity, and water supply over the next 5 years;
- Companies profits in respect of goods exported from Nigeria are exempt from tax provided the proceeds are repatriated to Nigeria and used exclusively for the purchase of raw materials, plants equipment and spare parts;
- Profits of companies whose output is primarily imputed to the manufacturing of products for exports are excluded from local corporation tax.
Disadvantages of Nigeria company registration
- Taxation burden
- Outside free zones, Nigeria is a high tax country. Corporate income is taxed at 30%, withholding tax rate of 10%, and a VAT rate of 5%;
- Nigeria boasts only 11 double taxation avoidance treaties. None of them materially reduce local withholding tax.
- Business challenges
- When running a business in Nigeria, companies may only hire expatriate workers if they have a minimum share capital of US$30,000 and are successful in applying for an expatriate quota. US$90,000 in share capital is required to guarantee two positions for foreign workers;
- The country suffers from i) a lack of a steady power supply ii) poor quality roads iii) slow internet for supporting a smooth running of business in Nigeria;
- Bribes are a common practice in many facets of doing business in Nigeria. The country is indeed poorly ranked as the 31st most corrupt country worldwide, according to the 2015 corruption perceptions index. Any dealings with the Nigerian judicial system are mired by executive interference and corruption throughout all levels of the judiciary;
- Intellectual property rights are poorly protected and copyrights, patents, and trademarks are not enforced. Prosecuting intellectual property theft is a waste of time;
- Nigeria has one of the world’s least efficient property registration systems. Acquiring the rights to property and proving those rights in the eyes of the Nigerian court system is difficult.
- Company law challenges
- Registering a company in Nigeria is time-consuming, requiring an average of 5 weeks to complete. In addition, depending on the industry, obtaining the proper licensing to do business can take up to an additional 14 weeks to complete;
- Industries with restrictions on foreign ownership include i) aviation and petroleum ii) shipping and real estate iii) telecommunications;
- Obtaining a license to do business in an export processing zone requires a minimum of US$62,000 in share capital for the company. These funds must be deposited in to a corporate bank account or spent on capital goods for the business prior to the license being granted;
- Following company registration, each wholly foreign owned entity must secure i) Nigerian Investment Promotion Commission (“NIPC”) registration ii) a business permit from the Ministry of Internal Affairs iii) a Certificate of Capital Importation from the Nigerian bank iv) an Expatriate Quota from the Ministry of Internal Affairs and v) Register with Tax Authorities and Obtain First Tax Clearance Certificate.
- Safety concerns
- Security and safety are main issues faced by entrepreneurs willing to hire expats in Nigeria. While the homicide rate is below the average for Africa, it is still ten times higher than the UK rate. Investors will likely need to spend additional money on security and insurance of their foreign employees;
- Malaria, hepatitis A, dengue fever, yellow fever, and African sleeping sickness occur commonly in Nigeria.
- Tax exemption through Special Economic Zones
Best uses for a Nigeria company
- Easy access to African markets
- Through rail, road, sea, and air, Nigeria’s location allows entrepreneurs starting a company in Nigeria an easy access to the lucrative West African and sub-Saharan Africa markets. From Nigeria, a business person can fly to anywhere in Africa in under 6 hours;
- English is the official business language and is spoken by the majority of educated business persons in the country, making it easier for foreign companies to start a business in Nigeria through subsidiary company registration;
- Nigeria boasts the lowest production costs in Africa, with skilled labor costs in particular being significantly cheaper than other African countries;
- There is no minimum share capital requirement to register a Nigeria limited liability company;
- Nigeria is an active member in the Organisation of Islamic Cooperation (OIC) trading bloc, minimizing tariffs when trading with any of the 57 member countries, including Saudi Arabia, UAE, and Malaysia;
- Traveling around Nigeria is inexpensive, with taxi fare and petrol costing significantly less than in other African countries.
- Easy access to African markets
Tell us what you need - we’ll send you a customised proposal in 5 hours!
To help us engineer the optimum Nigeria corporate structure, please complete the 3-minute questionnaire below; then press the submit button below.
Within 5 hours, one of our senior staff will ring or email you:
- Time to incorporate: Five weeks
- Cost to set up: US$19,400
- Minimum capital: US$60,000
- Physical office required: Yes
- Shareholders: 2
- Directors: 1
- Company secretary: Yes
- Resident director: No
- Corporate tax rate: 30%
- Corporate tax base: Worldwide
- Shelf companies: Available
- Main company type: Limited company
Useful links for Nigeria
Government and public authority websites:
- Central Bank of Nigeria
- Nigerian Stock Exchange
- Nigerian Investment Promotion Commission (NIPC)
- Nigeria airports
- PWC Paying taxes 2014
- Deloitte taxation and investment in Nigeria
- Invest in Nigeria – KPMG
- Why Invest In Nigeria – NIPC
- Investment Policy Review – UNCTAD
- Companies Regulation 2012 – CAC
- 2013 Banking Industry Customer Satisfaction Survey – KPMG