FREQUENTLY ASKED QUESTIONS
A. THE NIPC
B. INVESTING IN NIGERIA
Is there a limit to foreign participation in an enterprise in Nigeria?
What are the requirements for the Incorporation of a Company in Nigeria?
What are the requirements for the issuance of Business Permit?
What approvals/licenses would an investor require to set up an enterprise?
C. INCENTIVES
D. MISCELLENOUS INFORMATION
Where could one get information about Nigeria’s economic data?
Which is the Agency responsible for privatization in Nigeria?
What are the countries of origin of Companies registered with NIPC?
The Nigerian Investment Promotion Commission (NIPC) is an Agency of the Federal Government established by the Nigerian Investment Promotion Commission Act No.16 of 1995 to promote investment in Nigeria.
2. What are the functions of NIPC?
NIPC is a government agency with perpetual succession and a common seal specially established, among other things to:
i. Co-ordinate, monitor, encourage and provide necessary assistance and guidance for the establishment and operation of enterprises in Nigeria;
ii. Initiate and support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors;
iii. Promote investments in and outside Nigeria through effective promotional means
iv. Collect, collate, analyse and disseminate information about investment opportunities and sources of investment capital and advise on request, the availability, chance or suitability of partners in joint-venture projects;
v. Register and keep records of all enterprises to which the NIPC Act legislation applies;
vi. Identify specific projects and invite interested investors for participation in those projects;
vii. Initiate, organise and participate in promotional activities such as exhibitions, conferences and seminars for the stimulation of investments;
viii. Maintain liaison between investors and Ministries, government departments and agencies, institutional lenders and other authorities concerned with investments;
ix. Provide and disseminate up-to-date information on incentives available to investors;
x. Assist incoming and existing investors by providing support services;
xi. Evaluate the impact of the Commission in investment in Nigeria and recommend appropriate remedies and additional incentives;
xii. Advice the Federal Government on policy matters, including fiscal measures designed to promote the industrialisation of Nigeria or the general development of the economy;
xiii. Perform such other functions as are supplementary or incidental to the attainment of the objectives of NIPC Act.
NIPC was set up with the mandate of investment promotion, facilitation and advocacy. Its mission is to proactively position and promote Nigeria as the preferred investment haven. It renders the following services:
Provide pre and post investment services such as:
· Provision of investment related information
· Grant of Business Permit
· Facilitation in obtaining requisite licenses
· Grant of Pioneer Status
· Facilitation in securing other investment incentives not granted by NIPC
· Negotiation for grant of Special Incentives
· Match make indigenous entrepreneurs with prospective foreign investors for the purpose of joint ventures
No, NIPC does not give loans of any kind. However, the Commission can introduce an investor with a good project to funding agencies. Please note that this does not imply being guarantor for the investor.
Yes. NIPC maintains the following zonal offices:
· NORTH-EAST ZONAL OFFICE, MAIDUGURI
No. 1 Bosco Line, Kirikasama Area
(Opp. State Secretariat)
Maiduguri, Borno State
Tel: 076-235504
· NORTH -WEST ZONAL OFFICE
3rd Floor, African Alliance Building
No. 1F Sani Abatcha Way
Bompai-Kano
Tel: 064-641312
Fax: 064-64628
· NORTH- CENTRAL ZONAL OFFICE, JOS
No. 60 Murtala Muhammed Way
Tere House, Opp. Strabud Bus Stop
Tel: 073-458488
Fax: 073-458487
· SOUTH-EAST ZONAL OFFICE, ENUGU
No. 2 Ukwa Street,
Independence Layout
Enugu
Zonal Head Contact:
080160183148
email: paultonia2002@yahoo.com
Tel: 042-255079
Fax: 042-255506
· SOUTH-WEST ZONAL OFFICE
Former Nigerian Tobacco Company (NTC) Building
Leaf Road, Iyaganku
Ibadan
Foreigners may own up to 100% of any Nigerian business (S17) except in the Maritime sector (Cabotage).
Under the provisions of the Foreign Exchange (Monitoring & Miscellaneous Provision Act No. 17 of 1995) , foreign investors are free to repatriate their profits and dividends net of taxes through an authorized dealer in freely convertible currency.
Private Companies Limited by Shares
Public Companies Limited by Shares
Companies Limited by Guarantee
Unlimited Companies
Exemptions are granted to foreign Companies undertaking special project. Companies seeking exemption are to forward their application to the Secretary to the Federal Government of Nigeria.
· Search for availability of name
· Payment of appropriate stamp duty fee at the Federal Board of Internal Revenue
· Submission of Memorandum and Articles of Association together with statutory forms for verification and assessment
· Payment of statutory fees at Corporate Affairs Commission
For further details visit the Corporate Affairs Commission (CAC). Website @ www.cac.gov.ng or contact them at:
The Customer Service Unit,
Corporate Affairs Commission,
Plot 565 Ndola Square,
Off Micheal Okpara Street,
Wuse Zone 5,
Abuja
What are the requirements for Business Permit?
i. Formal application letter to Executive Secretary
ii. Minimum Share Capital Requirement - N10million
iii. Duly completed NIPC Form I
iv. Certificate of Incorporation
v. CAC’s Forms C02 and C07
vi. Memorandum and Articles of Association
vii. Tax Clearance Certificate
viii. Certificate of Capital Importation
ix. Evidence of acquisition of Business Premises (Tenancy or Lease Agreement)
x. Feasibility Report
Fees
i. NIPC Form I - N50, 000
ii. Collection of Business Permit Certificate - N50, 000
In addition to the requirements listed under Business Permit, the following are also required:
· Evidence of Acquisition of Operational Premises and Operational Machinery Equipment in the case of Industrial Establishment
· Evidence of foreign Capital Importation
· Management and Technical Service Agreement (for service Companies)
· Tax Clearance
· Minimum Authorized Share Capital of Ten Million Naira (N10,000,000)
· The Company must produce its project implementation programme
· The Company must produce a training programme for Nigerians in addition to management success schedule
Approvals/licenses are given by the following Agencies depending on the sector to be invested in:
Oil & Gas Sector
1. Department of Petroleum Resources (DPR) – Oil & Gas
Plot 622, Eket Close
Area 8, Garki,
P.M.B. 399
Tel: 234-9-2349982, 2349988
Food & Drug Manufacture
2. National Agency for Food and Drug Administration and Control (NAFDAC) – Food and Drug Manufacturing
Moshod Abiola Road, Area 2
P.M.B. 5023 Garki, Abuja
Tel: 234-9-2346383, 2346405, 2346402
Website: www.nafdacnigeria
Manufacturing
3. Standards Organisation of Nigeria (SON) – All Manufacturing Sectors
13/14, Victoria Arobieke Street
Off Admiral Way
Northern Business District
Lekki Peninsula, Lagos
Tel: 234-9-2708231-4
Telecommunication
4. Nigerian Communication Commission – Telecommunication
Plot 72, Ahmadu Bello Way, Central Business District,
Benue Plaza
Abuja,
Federal Capital Territory
Tel: 234-9-2340330
Tel: 234-9-2344589
Website: www.ncc.gov.ng
Agriculture
5.Federal Ministry of Agriculture – Agriculture
FCT Secretariat, Area 11
Garki, Abuja
Tel: 234-9-2341931, 2342331, 2341458
Environmental Impact Assessment Certification (for all Industries)
6. Ministry of Environment – Manufacturing
Federal Secretariat Complex
(7&9 Floor)
Shehu Shagari Way, Maitama
P.M.B. 468, Garki, Abuja
Tel: 234-9-523431, 5234932, 5234932
Tourism
7. National Tourism Development corporation
Old Federal Secretariat, Area1
P.M.B 167 – Garki
Abuja
Tel: 234- 2764,
Fax: 2342775
Solid Minerals
8. Ministry of Solid Minerals Development
Federal Secretariat Complex,
Shehu Shagari Way, Maitama
P.M.B 107, Garki Abuja
Tel: 234-9-5235830, 5236517
Power & Steel
9. Ministry of Power and Steel
Federal Secretariat Complex,
Shehu Shagari Way, Maitama
P.M.B. 278, Garki, Abuja
Tel: 234-5237064-6
30%.
Investors are prohibited from participating in the following business activities: Businesses involved in production of military or paramilitary attire and equipment; or production of narcotic drugs and psychotropic substances (S8).
There are both general sector specific and incentives. The general incentives include the following:
a. Pioneer Status
Pioneer status takes the form of five-year tax holiday to qualifying industries anywhere in the federation.
The grant of pioneer status to an industry is aimed at enabling the industry concerned to make a reasonable level of profit within its formative years. The profit so made is expected to be plugged back to facilitate expansion and growth of the industry.
15. Requirements for Pioneer Status?
Pioneer Status is conferred on a firm if it falls within the sectors that are defined by the government as priority areas. When a project is conferred with pioneer status, it becomes entitled to a tax holiday of 5 years.
i. Formal application letter to Executive Secretary
ii. Minimum Share Capital Requirement - N10million
iii. Duly completed NIPC Form II
iv. Certificate of Incorporation
v. CAC’s Forms C02 and C07
vi. Memorandum and Articles of Association
vii. Tax Clearance Certificate
viii. Evidence of acquisition of machinery; (Form M)
ix. Evidence of acquisition of Business Premises (Tenancy or Lease
Agreement)
x. Feasibility Report
i.NIPC Form II - N40, 000
ii.Processing Fees - N100, 000
iii.Collection of Approval letter - N60, 000
iv.Application for Extension - free
v.Approval of Pioneer Status Extension - N50, 000
b. Capital Allowances
The amount of capital allowance to be enjoyed in any year of assessment is restricted in Nigeria to a percentage of assessable profit. The following is a schedule for the sectors:
Tax Allowance | Initial % | Annual % |
Building Expenditure | 15 | Nil |
Industrial Building Expenditure | 15 | Nil |
Mining | 95 | Nil |
Plant i. (Agric prod) ii. Others |
95 50 |
Nil 20 |
Furniture fittings | 25 | 20 |
Motor Vehicles i. Public Transportatio ii. Others |
95 50 |
Nil 25 |
Housing Estate | 50 | 25 |
Ranching/Plantation | 30 | 50 |
R & D | 95 | Nil |
Agro Plants/Equipment Leased | Addition-al Invest. Allowanc 10%
|
Nil |
16. What are the Incentives in the Oil and Gas Sector?
In view of the enormous potentials in this sector, some fiscal incentives have been put in place by the government for investors as follows:
Gas Production Phase
· Applicable tax rate under the Petroleum Profit Tax (PPT) Act to be at the same rate as company tax currently at 30%.
· Capital Allowance at the rate of 20% per annum in the first four years, 19% in the fifth year and the remaining 1% in the books.
· Investment Tax Credit of the current rate of 5%.
· Royalty at the rate of 7% on shore and 5% offshore.
Gas Transmission and Distribution
· Capital allowance as in production phase above.
· Tax rate as in production phase.
· Tax holiday under pioneering status.
LNG Projects
· Applicable tax rate under PPT is 45%.
· Capital allowance is 33% per year on straight-line basis in the first three years with 1% remaining in the books.
· Investment tax credit of 10%.
· Royalty of 7% on-shore, 5% off-shore tax deductible
Gas Exploitation (Upstream Operations)
Fiscal Arrangements are reviewed as follows:
· All investment necessary to separate oil from gas from the reserves into suitable products is considered part of the oil field development.
· Capital investment facilities to deliver Associated Gas in usable form at utilization or transfer points will be treated for fiscal purposes as part of the capital investment for oil development.
· Capital allowances, operating expenses and basis for assessment will be subjected to the provisions of the PPT Act and the revised Memorandum of Understanding (MOU).
Gas Utilisation (Downstream Operations)
Incentives given to investors for encouragement of exploitation and utilization of Associated Gas for commercial purposes include:
· Companies engaged in gas utilization are to be subjected to the provisions of the Companies Income Tax Act (CITA).
· An initial tax free period of five years.
· Accelerated Capital Allowance after the tax-free period in the form of 90% with 10% retention in the books for plant and machinery.
· 15% investment capital allowance which shall not reduce the value of the asset.
In 1998, the government approved additional incentives to support the gas industry in the following areas:
· All fiscal incentives under the gas utilization downstream operations in 1997 are to be extended to industrial projects that use gas i.e. power plants, gas to liquids plants, fertilizer plants and gas distribution/transmission plants.
· Gas is transferred at 0% PPT and 0% Royalty.
· Interest on loans for gas projects is to be tax deductible provided that prior approval was obtained from the Federal Ministry of Finance before taking the loan.
· All dividends distributed during the tax holiday shall not be taxed.
17. What are the incentives in the Power Sector?
The Federal Government of Nigeria has set-up several incentives to attract foreign direct investment into the power sector. The incentives include:
· Tax Holidays of up to 5 years
· Exemption from Duty Taxes on imported equipment
· Capital & Investment Allowance which can be carried forward and used after tax holiday period
· Manufacture of transformers, meters, control panels, switchgears, cables and other electrical related equipment are considered as pioneer products/industries. As a result, there is tax holiday of 5 to 7 years for investors who invest in these areas.
· Power plants using gas are assessed under the companies income tax act at a reduced rate of 30%
· 100% foreign ownership of Electricity plants
· Repatriation of profit with a 5% withholding tax
· Instituting a politically independent, and transparent regulatory agent for the power sector that will effectively enforce the established regulatory framework
· Putting in place the necessary foundations e.g. reliable transmission infrastructure that would create a level playing field for efficient private sector participation in the electricity supply
· Implementing a transparent and predicated tariff adjustment mechanism that will cover cost of production and provide adequate returns on investment at all times.
18. What are the incentives in the Agriculture sector?
The government within the past few years has introduced a number of measures designed to promote investment. Some of these measures include:
i. Fiscal measures on taxation
ii. Effective protection of local industries with import tariff or outright ban on importation of locally available substitutes;
iii. Export promotion of Nigerian-made products; and
iv. Foreign currency facility for international trade.
Some of the specific incentives are categorized as follows:
i. Export Incentives: Retention of export proceeds in foreign currency:
Exporters of Nigerian commodities are obliged to open a foreign currency domiciliary account (D/A) with an authorized bank of its choice in which 100% of the proceeds of such exports may be credited in foreign currency.
ii. Export Development Fund (EDF)
The Export Development Fund (EDF) is a special fund set up by the government to provide financial assistance to private sector exporting companies to off-set part of their initial expenses in respect of certain export promotion activities. These are promotional activities and the conditions for eligibility are as outlined by the Nigerian Export Promotion Council (NEPC).
iii. Export Adjustment Fund Scheme:
This scheme serves as supplementary export subsidy to compensate exporters for the high cost of local production arising mainly from infrastruactural deficiencies and also other natural and negative factors beyond the control of the exporter.
iv. Tax and Other Incentives:
· Export oriented industries:
Export oriented industries that export not less than 60% of their product can enjoy 10 percent tax concession for five years.
· Excise duty:
In order to boost local industries, stimulate trade and reduce cost, government abolished most excise duties since 1st January 1998.
· Capital Assets Depreciation Allowance:
The Law in Nigeria provides an additional annual depreciation allowance of 50% on plant and machinery to manufacturing exporters who exports at least 50% of the value of their annual turnover provided that the product has at least 40% local raw materials content or 35% value added.
· Pioneer Status:
The provision of the Industrial Development (Income Tax Relief) Act with respect to Pioneer Status tax holidays applied to any manufacturing exporter who exports at least 50% of his annual turnover.
· Companies with small or no profits in Agro allied business are exempted from paying minimum tax of 20%
19. What are the Incentives in the Telecommunications Sector?
· Good tariff structure, which ensures that investors recover their investment over a reasonable period of time.
· Import duty on all telecoms equipment reduced from 25% to 5%.
· Measures on speedy clearance of goods at the ports
· Exclusivity period for licences, e.g. 5 years for the GSM licences, 3 years for long distance international gateway operators.
· Pioneer status for five years (under industrial Development (Income Tax Relief) Act 1990) is offered to interested investors who want to set plants for the manufacture of telecoms equipment in the country
20. What are the Incentives in the Solid Minerals Sector?
In order to encourage investments in the sector Government has put in place the following incentives;
· Three to five years tax holiday for new mining companies, and a system of deferred royalty payment that is determined by the level of the investment and the strategic nature of the project. Also possible is capitalization of expenditure on exploration and surveys;
· Companies profits tax reduction from 30% to 20%;
· Roll-over relief from Capital Gains Tax.
· Capital Allowance of 95% for Mining companies replacing their Plant and Equipment and 75% for companies with Mining Lease.
· Extension of infrastructure such as roads and electricity to mining sites;
· Provision of 100% foreign ownership of mining companies or concerns;
· Tax Relief on Interest Income: Interest accruing from loans granted by banks in aid of export activities enjoys favourable tax treatment.
· Capital Assets Depreciation Allowance: The law in Nigeria provides an additional annual depreciation allowance of 5% on plants and machinery to manufacturing exporters who export at least 50% of their annual turnover provided that the product has at least 40% local raw material content or 35% value added;
21. What are the incentives in the Free Trade Zones
Locating in any Free Trade zone in Nigeria automatically confers on the investor, certain locational advantages as well as very generous incentives. These include:
· Relative proximity to major markets of Africa, Europe and America.
· Large domestic market for the 25% of production that FTZ producers can sell in the Customs Territory.
· Favourable quotas on certain products from Nigeria export to the European Union (EU) and the United States.
· Made in Nigeria products enjoy preferential tariffs concessions in EU.
· Abundant supply of skilled labour at very competitive rates;
In addition to the above, the Nigeria EPZ’s regulatory regime is liberal and provides a conducive environment for profitable operations. The incentives available are among the most attractive in Africa and compares favourably with those in other parts of the world. These include:
a. Exemption from all Federal, State and Local Government taxes, levies and rates
b. Approved enterprises shall be entitled to import into a Zone, free of customs duty on capital goods, consumer goods, raw materials, components and articles intended to be used for purposes of and in connection with an approved activity.
c. Freedom from legislative provision pertaining to taxes, levies. Duties and foreign exchange regulations.
d. Repatriation of foreign capital on investment in the zone at any time with capital appreciation of the investment.
e. 100% foreign or local ownership of factory allowable
f. One stop approvals, (factory management deals with only the management of the zone) which grant all licenses whether or not the business is incorporated in the Customs territory
g. Unrestricted remittance of profits earned by investors
h. Permission to sell 100% of total production in the domestic market
i. No import or export license
j. Rent free land at construction stage, thereafter rent shall be as determined by the management of the zone. Foreign manager and qualified personnel may be employed by companies operating in the Zones
k. Operations within a zone shall commence on the date when the constructions of the perimeter fence and gate have been completed and the Authority has declared it so.
22. Where else could one get information about Nigeria Nigeria’s economic data?
Nigeria has an embassy or High Commission in most countries of the world. Please visit the Nigerian Embassy or High Commission in your country. For online information on Nigeria’s economic data, please visit www.cenbank.org, www.fmf.gov.ng or www.
23. What other Agencies are involved in the investment process in Nigeria?
The foremost investment Agency in Nigeria is the Nigerian Investment Promotion Commission (NIPC). The Commission however collaborates with other agencies to facilitate investment in Nigeria. Among these are:
· Corporate Affairs Commission
565 Ndola Sq off Micheal Okpara Street
Wuse, Zone 5
P. M. B. 198
Tel: 234-9-5241016, 5241046-50
Fax: 234-9-521017
Website: www.cac.gov.org
· Nigerian Export Promotion Council
Block 312, Kumba Street,
P.M.B. 133
Tel: 234-9-5230980, 5230932, 5230933, 5230981
Fax: 234-9-2340931
Website: www.nigxport.org
· Nigerian Export Processing Zones Authority
Shehu Shagari Way
Abuja
Tel: 234-9-234060, 2343062
Fax: 234-9-2343061, 2343063
· Federal Ministry of Foreign Affairs
Maputo Street, Wuse Zone 3
P.M.B.130, Garki, Abuja
Tel: 234-9-523049, 5230185-6, 5230490
· Federal Ministry of Commerce
Old Federal Secretariat Complex
Area 1, P.M.B. 88
Garki, Abuja
Tel: 234-9-2341687, 2341687, 2341490, 2348454, 2341484
· Federal Ministry of Internal Affairs
Old Federal Secretariat Complex,
Area 1, P.M.B. 7007,
Garki, Abuja
Tel: 234-9-2341934-5, 2342426
· Federal Ministry of Finance
Federal Ministry of Finance Building,
Ahmadu Bello Way, Central Business District
P. M. B. 14, GArki, Abuja
Tel: 234-9-2346932, 2346928, 2346286, 2346289
Website: www.fmf.gov.ng
· Federal Ministry of Industry
Old Federal Secretariat, Area 1
P.M.B. 85Garki, Abuja
Tel: 234-9-2341690
· National Tourism Development Corporation
Old Federal Secretariat, Area 1
P.M.B.167
Garki, Abuja
24. Which is the Agency responsible for privatization in Nigeria?
The Agency which is the secretariat for the National Council on Privatisation is located at
No.1, Osun Crescent, Off IBB Way
Maitama, Abuja
Tel: 234-9-5235256
Website: www.bpeng.org
25. What are the countries of origin of Companies registered with NIPC?
NIPC registers companies from all countries and Continents. However, majority of the investors are from Europe, Asia, USA and Africa.
26. What Sectors do the Companies mostly operate in?
The companies operate in all sectors apart from those that have been prohibited by the Federal Government. However, the sectors mostly operated in include, Agro/Agro Allied, Chemical/Petro Chemical, Engineering, Manufacturing, Tourism, Telecommunication, Transport and Other Services.
For more information on Nigeria, visit www.nipc.gov.ng
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