The Nigerian Government has put in place a number of investment incentives for the stimulation of private sector investment from within and outside the country. While some of these incentives cover all sectors, other are limited to some specific sectors. The nature and application of these incentives have been considerably simplified.

The incentives include:



The Companies Income Tax Act has been amended in order to encourage potential and existing investors and entrepreneurs. The current rate in all sectors, except for petroleum, is 30 percent.



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 ploughed back into the business.

Pioneer status is a tax holiday granted to qualified or (eligible) industries anywhere in the Federation for a period of 3 years (with additional 1 and 1 more years or 2 years straight)

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Capital importation and remittances -To fund their investments in Nigeria, foreigners are free, subject to money laundering restrictions, to bring in any recognised foreign currency into Nigeria. Such funds will have to be brought in through an authorised dealer (usually a bank authorised by the CBN). The bank through which the funds were imported will need to issue a certificate of capital importation (“CCI”) to the investor to evidence the inflow of such funds into Nigeria. Where capital is not imported in form of funds but is imported in form of equipment, machinery or raw materials, a CCI will also be required.

In the absence of a CCI, foreign exchange cannot be purchased from the official foreign exchange market for an easy repatriation of the proceeds of the foreigner’s investment from Nigeria. If, for example, no CCI was issued to a foreign lender as evidence of funds disbursed to a Nigerian business, the foreign lender may be unable to receive any principal or interest payments in its offshore accounts because the borrower will be unable to access the official foreign exchange market for the purpose of purchasing foreign currency to remit such principal and interest payment. However, it could if it has access to independent sources of foreign currency (as would a borrower that generates foreign currency through exports) lawfully make such interest and principal payments from its own resources.

Where a foreign national is investing in an enterprise in Nigeria, the bank through which the investment is received, shall issue a Certificate of Capital Importation (CCI) within 24 hours of receipt of capital subject to the prescribed documentation requirements. Capital importation means the inflow of foreign currency in cash or goods (raw materials, machinery and equipment). Issuance of CCI is based on presentation of the following documents:

  1. Authenticated SWIFT/Telex message advising payment;
  2. Board Resolution of the Nigerian beneficiary authorizing the investment;
  3. Purpose of capital importation e.g. working capital requirement, purchase of fixed assets etc.;
  4. Evidence of incorporation where applicable.
  5. Original Clean Report of Inspection;
  6. Original Invoice duly attested/sealed by the relevant Inspection Agents
  7. Original Bill of Lading;
  8. Original Exchange Control Documents.

Documents (e) to (h) above will apply only where capital is imported in form of equipment/machinery or raw materials. Non-resident investors are also required to register their investments with the NIPC for records and statistical purposes. Issuance of CCI is very important in processing repayment of external loans including suppliers’ credits. Very typical are projects financed by multilateral bodies and Export Credit Agencies (ECAs). The CCI will be required in accessing funds from the Foreign Exchange Market and effecting payment.

The main benefits in issuance of CCI are:

  • Foreign investors are guaranteed unconditional transfer of their dividends, profits and capital relating to their investment in any convertible currency through the banking system in Nigeria.
  • Funds may be sourced officially from the Nigerian Foreign Exchange Market i.e. CBN and Inter-bank subject to the prescribed documentation requirements.
  • Foreign loan repayment including suppliers’ credit may be repaid through the Nigerian banking system on the basis of the CCI and other required documents such as (i) duly completed Form ‘A’, (ii) copy of Loan agreement showing schedule of repayment, (iii) schedule of drawdown of the loan, and (v) Demand Note. For the purpose of remittance of dividends and profits the following documents are required:
  • Duly completed and approved Form ‘A’.
  • Audited accounts for the year dividends were declared.
  • Board/AGM Resolution authorizing payment of dividend/profits to both local and foreign shareholders.
  • Evidence of tax payment on the amount to be repatriated issued by the Federal Inland Revenue Services.
  • CCI or approved Status Certificate (in the case of old companies).
  • Copy of dividend warrant to be repatriated. Where the foreign investor intends to withdraw its capital, the following documents would be required:
  • Duly completed and approved Form ‘A’.
  • Copy of sale agreement
  • Original certificate of capital gains tax paid.
  • CCI or approved Status Certificate (in the case of old companies).
  • Evidence to show that the beneficiary has sold or transferred assets.
  • Evidence of valuation by an independent third party

The current rates applicable in respect of capital allowances are:

S/N Qualifying Expenditure in Respect of:- Initial Allowance (%) Annual Allowance (%)
1 Building Expenditure 5 10 per Annum
2 Industrial Building Expenditure 15 10
3 Mining 20 0
4 Plant excluding furniture and fittings 20 10
5 Furniture and Fittings 15 10
6 Motor Vehicle Expenditure 25 20
7 Plantation equipment expenditure 20 33
8 Housing Estate Expenditure 20 10
9 Ranching and Plantation Expenditure 25 15
10 Research and Development Expenditure 25 12
11 Public Transportation Motor Vehicle 30

The amount of capital allowance to be enjoyed in any year of assessment is restricted in Nigeria to 75% of assessable profit in case of manufacturing companies and 66% in case of others, except such companies in agro-allied industries that are not affected by this restriction. If leased assets are used in agro-allied ventures, the full (100%) capital allowance claimed will be granted. Moreover, where the leased assets are agricultural plants and equipment, there will be an additional investment allowance of 10% on such expenditure.



This is applicable to industrial establishments that have set up in – plant training facilities. Such industries enjoy a two percent tax concession for a period of five years.



This is a form of incentive granted to industries that provide facilities that ordinarily, should have been provided by government. Such facilities include access 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.



Without prejudice to the provision of the pioneer status enabling law, 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.



Industries with high labour/capital ratio are entitled to tax concessions. These are industries with plants, equipment and machinery, which essentially are operated with minimal automation. Where there is automation, such automation should not be more than one process in the course of production.
The rate is graduated in such a way that an industry employing 1,000 persons or more will enjoy 15 percent tax concession, while an industry employing 200 will enjoy 7 percent and those employing 100 will enjoy 6 percent and so on.



10% tax concession for five (5) years. This applies essentially to engineering industries, where some finished imported products serves as inputs. The concession is aimed at encouraging local fabrication rather than the mere assembly of completely knocked down parts.


This incentive is granted to companies engaged in manufacturing which incur qualifying capital expenditure for the purposes of approved expansion, etc. the incentive is in the form of a generalized allowance of capital expenditure incurred by companies for the following:-

  • Expansion of production capacity
    • Modernization of production facilities
    • Diversification into related products


A tax credit of 20% is granted for five years to industries that attain the minimum level of local raw material sourcing and utilization. The minimum levels of local raw materials sourcing and utilization by sectors are: –

Agro-allied – 70%
Engineering – 60%
Chemicals – 60%
Petrochemicals – 70%




(a) Companies with turnover of less than N1 million are taxed at a low rate of 20% for the first five years of operation if they are in the manufacturing business.
(b) Dividend from companies in manufacturing sector with turnover of less than N1 million is tax-free for the first five years of their operation.
(c) Dividends derived from manufacturing companies in petrol chemical and liquefied natural gas sub-sector are exempted from tax.


(a) Companies in the agro-allied business do not have their capital allowance restricted. It is granted in full i.e. 100%.
(b) The payments of minimum tax by companies that make small or no profits at all do not apply to agro-allied business.
(c) Agro-allied plant and equipment enjoy enhanced capital allowances of up to 50%.
(d) Processing of agricultural produce is a pioneer industry;
consequently, there is 100% tax-free period for 5 years
or projects into processing of agricultural produce.
(e) Agricultural and Agro allied Machinery:
All agricultural and agro-industrial machines and equipment to enjoy 1% duty.
(f) Agricultural Credit Guarantee Scheme Fund (ACGSF) administered by the Central Bank of Nigeria:
Up to 75% guarantee for all loans granted by commercial banks
for agricultural production and processing.
(g) Interest Drawback Program Fund:
60% repayment of interest paid by those who borrow from banks under the ACGS, for the purpose of cassava production and processing provided such borrowers repay their loans on schedule.


The following incentives are available in the solid minerals sector:

(a) 3 to 5 years tax holiday;
(b) Low income tax of between 20% and 30%;
(c) Deferred royalty payments depending on the magnitude of the investment and the strategic nature of the project;
(d) Possible capitalization of expenditure on exploration and surveys;
(e) Extension of infrastructure such as roads and electricity to mining sites;
(f) The holder of a mining lease shall, where qualified, be entitled to:

  1. i) Depreciation or capital allowance of 75% of the certified true capital expenditure      incurred in the year of investment and 50% in subsequent years
    ii) Investment allowance of 5%
    iii) Exemption from payment of customs & import duties
    iv) Expatriate quota & resident permit for approved expatriate personnel
    (g) In addition to roll-over relief under the capital gains tax (CGT), companies replacing their plants and machinery are to enjoy a once-and-for-all 95% capital allowance in the first year with 5% retention value until the assets is disposed, 15% will be granted for replacement of an asset.


The incentives in this sector are granted to companies that are into joint ventures with the Nigerian National Petroleum Corporation and have signed Memorandum of Understanding. The incentives are:

  • Guaranteed minimum margin of USS2.50 bl;
    • Accelerated capital allowances which provides that the capital allowances can be carried forward indefinitely;
    • Graduate royalty rates approved for oil companies.

Onshore production in territorial waters and continental shelf areas beyond 100 meters.
Investment tax allowances (ITA) is granted to a company in respect of any asset for the accounting period. The ITA is graduated as follows:

On shore – 5%
Off shore in depth of up to 10m – 10%
Off shore in depth of between 100-200m – 15%
Off shore in depth of over 200m – 20%


In view of the enormous potentials in this sector, Government has approved the following fiscal incentives:


  • Applicable tax rate is the same as the company income tax which is 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 at the current rate of 5%
    • Royalty at the rate of 7% on shore and 5% off shore


– Capital allowance as in production phase above
– Tax rate as in production phase
– Tax holiday under pioneer status


– 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 7% on-shore 5% off-shore, tax deductible


Fiscal arrangements are reviewed as follows:

  •  All investments necessary to separate oil from gas from reserves into suitable product 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).



  •  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 three years renewable for an additional two years;
    Accelerated capital allowances after the tax-free period in the form of 90% with 10% retention in the books;
    •    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 gas developmental projects, including those engaged in power generation, liquid plants, fertilizer plants, gas distribution/transmission pipelines are taxed under the provisions of Companies Income Tax (CITA) and not the Petroleum Profit Tax;
    •    – All fiscal incentives under the gas utilization downstream operations since 1997 are to be extended to industrial projects that use gas i.e. power plants, gas to liquids plants, fertilizer plants, gas distribution/transmission plants;
    •    – The initial tax holiday is to be extended from three years to five years;
    •    – Gas is transferred at 0% PPT 0% Royalty;
    •    – Investment capital allowance is increased from 5% to 15%;
    •    – Interest on loan on gas project is to be tax deductible provided that prior approval was obtained from the Federal Ministry of Finance before taking the loan; and
    •    – All dividends distributed during the tax holiday shall not be taxed.


Government provides non-fiscal incentives to private investors in addition to a tariff structure that ensures that investors recover their investment over a reasonable period of time, bearing in mind the need for differential tariffs between urban and rural areas. The tariff structure as approved by the regulatory authority, Nigerian Communication Commission, also provides adequate cross-subsidy between the profitable trunk and local calls of the urban and non-profitable operation of the rural areas.
Other Incentives in place are:-

  1. a) Manufacture/installation of telecommunications related equipment is considered as pioneer activity. As a result, they enjoy 3 to 5 years tax holiday.
    b) Taxes and duties do not exceed those charged on essential electrical goods.
    (vii) ENERGY (Electricity)
    Among the incentives put in place by Government to encourage investors in the sector are:
    Tax holiday of 3 – 5 years is granted to companies that manufacture:
    a) Transformers, meters, control panels, switchgears, cable and other electrical related equipment, which are considered pioneer products/industries:
    b) Power plants using gas are assessed under the company income tax act at a reduced rate of 30%.



The following incentives have been put in place to encourage domestic and foreign investors’ participation in the tourism industry in Nigeria:

  1. i) The tourism sector was accorded preferred sector status in 1999. This makes the sector qualify for incentives (available to similar sectors of the economy) such as tax holiday, longer years of moratorium and import duty exemption on tourism related equipment.
    ii) Provision of basic infrastructure that is, road, water, electricity, communications etc to centre of attraction. Some states have specific areas as tourism development zones thereby making acquisition of land easier.
    iii) Provision of land for tourism development at concessional rates.
    iv) Availability of soft loans with long period of moratorium.



The following incentives are in place to encourage investment in the sector:
i) Shipbuilding, repairs and maintenance of vessels, boat, barges, diving and underwater engineering services, aircraft maintenance and manufacturing are considered pioneer products. As a result, they enjoy 3 -5 years tax holiday depending on location.



Export incentives are aimed at encouraging and assisting exporters to increase and diversify the total value and volume of non-oil exports from Nigeria. These incentives are designed to address the major problems of supply, demand and price competitiveness of Nigeria’s export. Some of the incentives now take the form of Negotiable Duty Credit Certificate (NDCC) and are as indicated below:

(i) Manufacture – In – Bond Scheme
The Manufacture – in – Bond Scheme is designed to encourage manufacturers to import raw material inputs and other intermediate products duty-free for the production of exportable goods, backed by a bond issued by any recognized financial institution. The bond will be discharged after evidence of exportation and repatriation of foreign exchange has been produced.
(a) Guidelines:
(i) The Manufacturer-in-Bound Scheme (MIBS) shall be applicable to export manufacturers only.

(ii) Interested manufacturers should apply to the Federal Ministry of Finance using the prescribed forms.

(iii) For a manufacturer to enjoy the scheme, the factory premises must be approved for that purpose by the Nigerian Customs service.

(iv) Approval including the Import Requirement Certificate (IRS) should be obtained within a period of two months and transmitted to the Nigerian Customs service for implementation.

(v) The Nigerian Customs Service will determine acceptability guarantee Bond issued by Commercial or Merchant Bank or NEXIM or Insurance Companies covering not less than 110 per cent customs duty payable on each consignment.

(vi) Under this scheme, manufacturers of export commodities will be entitled to import duty-free raw material inputs, CKDS and intermediate inputs whether prohibited or not for the manufacture of export commodities.

(vii) The Manufacturer-in-Bond Scheme shall operate on an annual (12 calendar months) importation basis as the exporter wishes. For prohibited items however, the scheme shall operate Import by Import basis.

(viii) The Bond, which shall be effective from the date of its issuance by the Bank shall be discharged when the condition stipulated therein have been fulfilled.

(ix) The Nigerian Customs Service will periodically monitor the utilization of raw materials imported under this scheme until the Bond is fully executed.

(x) In the event of inability of any manufacturer to fulfill the conditions stipulated in the Bond, the manufacturer to fulfill the conditions stipulated in the Bond, the manufacturer shall apply to the Nigerian Customs Service through its approved dealer Bank, for an extension of the Bond particularly when the life of the Bond has expired. The extension of the Bond shall not exceed three months.

(xi) Repatriation of the foreign exchange realized from the transaction shall be confirmed by the Central Bank of Nigeria before the Bond is discharged.

(xii) Bill of Entry marked “Manufacturer-in-Bond Scheme” shall be used for clearance of goods under the scheme.

(xiii) A Committee comprising the Ministry of Finance, representatives of the Nigerian Customs Service, Nigerian Export Promotion Council, Standard Organization of Nigeria and the Central Bank of Nigeria shall monitor the scheme. The monitoring body shall render a quarterly Report to the NMIBS Committee.

(xiv) In the event of default by the manufacturer, the Nigerian Customs Service shall redeem the Bond by calling on the guarantor to pay up the appropriate customs duties and other associated charges.

(xv) A manufacturer participating in the Manufacturer-in Bond Scheme is expected to designate a warehouse or store in his factory premises for the storage of inputs and finished goods; and

(xvi) Import Duty Report (IDR), Clean Report of Findings (CRF), Form ‘M’ and other relevant documents for this scheme shall be clearly marked “MIB Scheme”.

(b) Duty Drawback Scheme:

Duty Drawback scheme provides for refunds of duties/sur-charges on raw materials including packing and packaging materials used for the manufacture of products upon effective exportation of the final products. The new Duty Drawback scheme shall give automatic refunds (60%) on initial screening by the Duty Drawback Committee and upon the presentation of bond from a recognized Bank, Insurance Company or other financial institution.

The Bond will cover 60% of the refund to be made to the exporter and will only be discharged after final processing of the application has been made. At the end of the processing of exporters claims, the Duty Drawback Committee shall grant any balance where applicable or request for refunds for any over payment made.

(c) Duty Drawback Facilities:

The scheme provides for fixed drawback and individual drawback facilities. The fixed drawback facility is for those Exporters/Producers whose export products are listed in the fixed drawback schedule to be issued from time to time by the Committee. When the import content of the export produce is more or less constant, and import prizes (including exchange rate), tariff rates and technology used are relatively stable or “fixed”, it is possible to calculate a standard Input-Output Co-efficient Schedule (ICS) for these category of products on the basis of which a fixed drawback rate can be computed to be rebated per unit of export product.

Whereas the individual drawback is for producers/exporters who do not qualify under the fixed drawback facilities, it is therefore a straight forward traditional drawback mechanism under which duty is paid on all import inputs. The duties are subsequently, rebated on inputs used for export production. As general case the final export/producer can apply for the Scheme.

(d) Eligibility:

A trading Company which collects industrial products from one or more manufacturers as well as a trading Company which imports raw material inputs including packaging and packaging materials used for the production of goods exported by him could also apply for the scheme. Such a trading company must have entered into a contract with final producer of the product in such a way that Duty Drawback Committee can obtain necessary information and documents to enable the Committee act appropriately. Applications must be companies incorporated in Nigeria



(e) Time Limit:

Duty drawback application must be filled within a maximum of two years from the date of exportation. In order to qualify for the drawback payment (both individual and fixed drawback) exportation of the product which was produced with imported inputs must be completed within 18 months after the importation of the inputs.

(f) Application Procedure:

Application for either Fixed or individual Drawback Facilities should file the following documents to the Duty Drawback Committee.

(i) Completed new application form for Duty Drawback Rate/Refund obtained from the Duty Drawback Rate/Refund obtained from Duty Drawback Secretariat and all Zonal Offices of the Nigerian Export Promotion Council

(ii) Attach clear photocopies of the following documents in triplicates:
Import bill of entry for Home use (Customs and Excise Form C 188) for the respective raw material inputs used for the export production.
Import bill of landing for the raw material inputs used for the export production.
Letter of contract agreement between the Trading Company and producer in cases where the Trading Company is applying for the facility
Current registration certificate with NEPC

(iii) In addition to the above documents, all applications for refunds should be filed with the following in triplets:
Export Bill of Entry for Non-Domestic Goods (Customs and Excise Form sale 98)
Form NXP

(iv) Bank Bond to be issued by a recognized Bank or Insurance Company to the tune of 60 per cent upfront payment approved by the Committee as duty drawback refund and to guarantee the refund of any overpayment made to the exporter.

(g) Rules of Duty Drawback Application and Processing:

The following rules have to be observed to simplify the processing procedures:

(i) For the same export product defined in an export entry documents, all inputs used to produce a given export article should be treated as part of a single application and therefore cannot be divided into separate duty drawback applications.
If imported inputs, registered in a single import entry document are sub-divided and used for production of more than one export consignment, the import entry document should include information on the production of inputs and the balance remaining to be used.

(ii) Export Expansion Grant (EEG) Scheme

(a) Incentive rates:

The scheme will operate the “Weighted Eligibility Criteria” in assessing application for EEG. The baseline data as supplied by individual applicant company would be used in its assessment. Thus the method of assessment is company specific. A company’s EEG assessment would be conducted once yearly and the determined rate will apply throughout the year.
The weighted eligibility criteria have four bands: 30% 20%, 10%, and 5%. The following template will be used in assessing the incentive rate for every EEG applicant.
Determination of Export Performance – Eligibility Criteria

S/N Eligibility Criteria Company Data Threshold Weight Company Score
1 Local value added 25%
2 Local content 20%
3 Employment (Nigerians) 20%
4 Priority Sector 10%
5 Export Growth 20%
6 Capital Investment 5%


Total Weight 100%

A new entrant into the EEG scheme shall provide prior period financial statement or where applicable an investment plan for its assessment.

(c) Eligibility:

(i) Export must be registered with the Nigerian Export Promotion Council (NEPC).
(ii) Eligible exporter shall be a manufacturer producer or merchant of products of Nigeria origin for the export market (i.e. the products must be made in Nigeria).
(iii) An exporter must have a minimum annual export turnover of N5million and evidence of repatriation of proceeds of exports.
(iv) Exporter – company shall submit its baseline data which includes Audited Financial statement and information on operational capacity to NEPC.
(d) Validity for EEG Application
Qualifying export transaction must have the proceeds fully repatriated within 180 days, calculated from the date of export.
(iii) Export Development Fund Scheme

The Scheme provides financial assistance to private sector exporting companies to cover part of their initial expenses in respect of the following export promotion activities:

  1. a) Participation in training courses, symposia, seminars and workshops in all aspects of export promotion
    b) Advertising and publicity campaigns in foreign markets
    c) Export market research and studies
    d) Production design and consultancy
    e) Participation in trade missions, buyer-oriented activities, overseas trade fairs, exhibitions and sales promotion
    f) Cost of collecting trade information, and
    g) Backing up the development of export oriented industries.
    (iv) Trade Liberalization Scheme (TLS) of Economic Community of West African States (ECOWAS)

This is an export liberalization incentive that focuses on the ECOWAS sub-region. The Scheme is an incentive primarily geared towards export activities within the ECOWAS sub-region. The objective is to significantly expand the volume of intra-community trade in the sub-region via the removal of both tariff and non-tariff barriers to trade in good originating from ECOWAS countries. This affords preferential access to the ECOWAS market from Nigeria.


The Oil and Gas Export Free Zone Act No. 8 of 1996 established an Oil and Gas Free Zone Authority to manage, control and co-ordinate all the activities within the zone. This zone encompasses three oil and gas service centers around the ports of Onne (near Port Harcourt), Calabar and Warri. All three ports have enhanced stacking and warehousing facilities awaiting subscribers. Incentives and fiscal measures approved by government that favour and encourage large investments in the region include:

  • No personal income tax
    • 100% repatriation of capital and profit
    • No pre-shipment inspection for goods imported into the free zone.


The Federal Government of Nigeria has passed an aggressive Free Zone Law which has created a business friendly environment benefiting from the following incentives:
•    Complete tax holiday for all Federal, State and Local Government taxes, rates, custom              duties and levies;
•    One-stop approval for all permits, operating licenses and incorporation papers;
•    Duty-free, tax-free import of raw materials for goods destined for re-export;
•    Duty-free introduction of capital goods, consumer goods, components, machinery, equipment and furniture;
•    Permission to sell 100% of manufactured, assembled or imported goods into the domestic Nigerian Market;
•    When selling into the domestic market, the amount of import of import duty on goods manufactured in the free zones is calculated on the basis of the value of the raw materials or components used in assembly not the finished product;
•    100% foreign ownership of investments;
•    100% repatriation of capital, profits and dividends;
•    Waiver of all import and export licenses;
•    Waiver on all expatriate quotas for companies operating in the zones;
•    Prohibition of strikes and lockouts;
•    Rent-free land during the first 6 months of construction;


(i) Exemption from tax of companies profits in respect of goods exported from Nigeria provided the proceeds are repatriated to Nigeria and used exclusively for purchase of raw materials, plants equipment and spare parts
ii) Exclusion from taxes the profits of companies whose supplies are exclusively from input to the manufacturing of products for exports.
iii) All new industrial undertakings including foreign companies and individual operating in an Export Processing Zone (EPZ) are allowed full tax holidays for three consecutive years.
iv) As a means of encouraging industrial technology, companies and other organizations that engage in research and development activities for commercialization enjoy 20% investment tax credit on their qualifying expenditure.
v) Dividends distributed by Unit in Nigeria are free of tax and no withholding tax is deducted there from since such incomes have already suffered tax in the first instance.
vi) All companies engaged wholly in fabrication of tools, spare parts and simple machinery for local consumption and export are to enjoy 25% investment tax credit on their qualifying capital expenditure while any tax payer who purchases locally manufactured plants and machinery are similarly entitled to 15% investment tax credit on such fixed assets bought for use.



For the purpose of promoting identified strategic or major investment, the Commission shall, in consultation with appropriate Government agencies, negotiate specific incentive packages for the promotion of investment as the Commission may specify.


In the last few years, double taxation agreements have been entered into by Nigeria with a number of countries. These agreements are entered into with a view to affording relief from double taxation in relation to taxes imposed on profit taxable in Nigeria and any taxes of similar character imposed by the law of the country concerned.

The method of relief from double taxation under Nigeria’s tax treaties is by way of a “tax credit”. The mechanism of the tax credit is such that the tax payable in Nigeria on profits of a Nigeria Company being remitted into the country is reduced by the amount of “foreign tax” paid abroad. The converse is equally true where an overseas company receives profits from abroad. Nigeria has DTA with the following countries:

  • UK;
  • France;
  • Netherlands;
  • Belgium;
  • Pakistan;
  • Canada;
  • Czech Republic;
  • Philippines; and

Negotiations are in progress at various stages with other countries like Turkey, Russia, India, and Korea.
Other countries have indicated their interest to commence negotiation of tax treaties with Nigeria. As a concession to Nigeria’s treaty partners, government has approved a lower treaty rate of 7.5 on dividends, interest, rent and royalties when paid to a bonafide beneficial owner of a treaty country.


As part of additional effort to foster foreign investors’ confidence in the Nigeria economy, Government continues to enter into bilateral investment promotion and protection agreements (IPPAs) with countries that do business with Nigeria.

The IPPA helps to guarantee the safety of the investment of the contracting parties in the event of war, revolution, expropriation or nationalization. It also guarantees investors the transfer of interests, dividends, profits and other incomes as well as compensation for dispossession or loss. To this end, Nigeria has concluded and signed IPPAs with:

  • France;
  • United Kingdom;
  • Netherlands;
  • Romania;
  • Switzerland;
  • Spain;
  • South Africa; etc.

Negotiations with the United States of America, Belgium, Sweden and the Russian Federation are at various stages.


The government in repealing the Nigerian Enterprises Promotion Act of 1972 (Amended in 1977 and in 1989) and promulgating the Nigerian Investment Promotion Commission Act of 1995 has liberalized the ownerships structure of business in Nigeria. The implication of this is that foreigners can now own 100% shares in any company as opposed to the earlier arrangement of 60%-40% in favour of Nigerians.



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.


The Nigerian Investment Promotion Commission Act guarantees that no enterprise shall be nationalized or expropriated by any government in Nigeria.