Article

Foreign Investments In Nigeria: An Outline

Introduction

A foreigner intending to do business in Nigeria should be aware that subject to a few exceptions, he is free to do so alone or in partnership with any other person. He should also be aware of the Nigerian government's taxation policies in place, aimed at promoting foreign investments.

A foreign investor is generally categorized into three:

1. Those exempted from registration under section 54 Companies and Allied Matters Act Cap. C20 L.F.N. 2004
2. Portfolio investors who buy into a Nigerian company without actual participation: section 26 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act Cap. F34 L.F.N. 2004
3. Direct investors who invest in the Nigerian market (primary or secondary) with foreign currency.

This article focuses on direct investors, although mention will be made of companies exempted. The discussion on regulation of portfolio investors is outside the scope of this article.

LEGAL REGULATORY FRAMEWORK

1. Companies and Allied Matters Act Cap. C20 L.F.N. 2004 (CAMA)
2. Investments and Securities Act Cap. I24 L.F.N. 2004
3. Nigerian Investment Promotion Commission Act Cap. N117 L.F.N. 2004 (NIPC Act)
4. Immigration Act Cap. I1 L.F.N. 2004
5. Foreign Exchange (Monitoring & Miscellaneous. Provisions Act Cap. F34 L.F.N. 2004
6. National Office for Technology Acquisition and Promotion Act Cap. N62 L.F.N. 2004
7. Industrial Inspectorate Act Cap. I8 L.F.N. 2004
8. Companies Income Tax Act Cap. C21 L.F.N. 2004
9. Personal Income Tax Act Cap. P8 L.F.N. 2004

OVERVIEW

An overview of some of the above mentioned legislation as they affect companies will now be given. Companies and Allied Matters Act Cap. C20 L.F.N. 2004 (CAMA)

Formation of a Foreign Company under CAMA

Foreign companies intending to start and carry on business in Nigeria must undergo the process of registration as a separate entity before they can operate: section 54 of CAMA, and until the foreign company incorporates as a Nigeria company, it cannot carry on any business in Nigeria or exercise any of the powers of a registered company. This provision does not affect the liability of a foreign company to be sued by Nigerians in Nigeria or their right to sue Nigerians in Nigeria: section 60 CAMA. It is an offence not to incorporate as a separate entity before carrying on any business, and any act of the company shall be void [sections 54(2) and 56.

The transaction is not only void it is also illegal since a penalty is imposed. The court will therefore not enforce the contract at the instance of any party to the transaction [2]. Exempted companies:

Foreign companies in Nigeria for a specific purpose can apply to the National Council of Ministers for exemption from the provisions of section 54 requiring registration in Nigeria;

These companies are:

• Foreign companies invited to Nigeria by or with the approval of the Federal Government to execute any specified individual or loan project;
• Foreign government-owned companies engaged solely in export promotion activities and
• 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 [3].

Application for exemption: An application for exemption from registration as a Nigerian company is addressed to the Secretary to the Federal Government [4].

Period of exemption: Where exemption is granted, it is granted for a specified period.

Revocation of exemption: The National Council of Ministers has the power to revoke the exemption granted if it is of the opinion that the company has contravened any provision of CAMA or has failed to fulfil any condition contained in the exemption order or for any good or sufficient reason. [Section 56].

Filing of reports with CAC: An exempted company should file annual reports with the CAC, in the form prescribed by the CAC. [section 57].

Status of an exempted company: It has the status of an unregistered company. [Section 58].

Registration Process at the CAC: A foreign investor, who does not qualify for exemption, must register with the Registrar-General of the Corporate Affairs Commission as a Nigerian company.

Most business ventures are registered as either Public or private companies limited by shares: This discussion will be based on incorporation of private companies limited by shares.

A legal practitioner will require some information from his client to prepare the necessary agreements and incorporation documents for filing at the Corporate Affairs Commission (CAC). These are:

Joint venture agreement

Preparation of a joint venture agreement (where necessary) along with any other pre-incorporation agreement or documents between a Nigerian and the foreigner. Of course, this is unnecessary if the business is to 100% foreign owned.

Name of the proposed company: The name of a private company limited by shares shall end with the word "Limited" or the abbreviation "Ltd".

Availability of Name: Before a company is incorporated, the legal practitioner must ensure that the proposed company name is available for use. CAMA allows the promoters to file a request for “Reservation and Availability of Name." (Form CAC 1)

The proposed name is then checked against existing registered names. If the name is available, it may be reserved for sixty days. During the period of reservation, no other company shall be registered under the reserved name or under any other name that in the opinion of the CAC bears too close a resemblance to the reserved name

Preparation of the Company’s Constitution: This comprises the:

Articles of Association

The Memorandum must be registered along with Articles of Association that prescribe regulations for the administration of the company: Section 33.

The form and contents of the Articles of Association are prescribed in Table A of Schedule 1 to CAMA as follows:

Part I - Public Companies having a share capital

Part II - Private Companies having a share capital

However, the promoters are allowed to make such additions, omissions or alterations as they may require. The Articles must be printed, stamped as a deed, divided into paragraphs numbered consecutively and they must be signed by each subscriber of the Memorandum of Association in the presence of at least one witness who should also supply his name, address and signature [7]:

Memorandum of Association

Model Memoranda of Association of companies limited by shares are prescribed in schedule 1 Table B to CAMA as follows:

Contents of the memorandum The company’s memorandum must comply with the provisions of section 27.

• It must bear its name
• It must stipulate that the registered office of the company is situated in Nigeria
• It must state the company’s objects;
• It must state that the liability of the company’s members is limited by shares
• It must state the authorised share capital, the minimum authorized share capital is N10,000 in the case of private companies or N 500,000 in the case of public companies. The share capital must be divided into shares of a fixed amount;
• It must state the number of shares to be taken by each subscriber which shall not be less than twenty-five per cent of the authorised share capital
• Each subscriber (minimum of two) must sign the memorandum in the presence of at least one witness who must attest the signature of the subscriber.

Notice of the Address of the Registered Office: Form CAC 2.2

The promoters must decide on an address in Nigeria to be used as the registered office of the company: Section 27 (1)(b). Postal box or Private bag addresses are not acceptable (Section 35 (2)(b)). The importance of a registered office is that:

• If a legal document has to be served on the company, this may be done by leaving it at, or sending it by post to, the registered office or head office of the company: see Kisari Investment Ltd.V La-Terminal Company Ltd [2001] F.W.L.R. (PT. 66) 766 and M.G.F. Nig Ltd V Gwus International Ltd [2001] 24 WRN 148 [8]
• Various registers and other documents are kept at the registered office
• Residence for tax purposes is fixed by ascertaining where the company’s center of control and management is.

Statement of the Authorised Share Capital Form CAC 2.4
The authorised share capital (otherwise known as nominal share capital) is the amount of capital with which the company is registered. The total sum is usually divided into equal units of shares bearing the same value. It is required that subscribers of the Memorandum of Association take among them a total number of shares of a value of not less than 25% of the authorised share capital (Section 27 (2)(b)) the rest may be allotted as the need arises.
A Statement of the List and Particulars of First Directors: Form C.O.7
This contains the list and particulars of those who are to be the first directors of the company. To prevent misrepresentations, the Act also requires that the appointees must sign written consents to act as Directors. This is usually endorsed on the Form C.O.7 (Section 35 (2)(c).
Section 246 states that there must be a minimum of 2 directors for every company Section 246(2) provides that if the number of directors is below 2 and if the other director is not appointed within one month such a company should not carry on with its business until the other director is appointed.
Statutory Declaration by a Legal Practitioner: Form C.O 1
This is the prescribed form of a statutory declaration to be made by a legal practitioner to the effect that the requirements of the Act for the registration of a company have been complied with. This declaration must be made before a Commissioner of Oaths after the completion of all incorporation documentation. The CAC may accept the declaration as sufficient evidence of compliance. (Section 35 (3).
Return of the Allotment of shares: Form CAC 2.5
This form is not strictly an incorporation document, however, where shares are to be allotted, the CAC must be informed through the filing of Notice or return of the Allotment of shares Form (CAC 2.5) which gives details of the number and class of shares allotted, together with the names and addresses of allottees. (Section 129).

Stamp duties

The promoters arrange for two copies each of the memorandum; articles of association and the statement of authorized share capital to be taken to the stamp duties registry for stamping. Prescribed charges for stamp duty on the nominal share capital of the company are then calculated: see Stamp duties Act Cap. S8 L.F.N. 2004 [9]
Cheques and certified bank drafts are made payable to the order of the Federal Government of Nigeria – FBIR (stamp Duties Account)
Submission of Documentation to the CAC and Registration Fees
Incorporation and other documents are submitted to the CAC. A prescribed fee is payable at the office of the CAC's office, Abuja. See seventeenth schedule to CAMA and Companies and Allied Matters (Fees) Regulations, 2003 for fees payable.

Same day incorporation

CAC guarantees same day registration of companies on payment of N50, 000.00 (excluding filing fees)
Registration and Certificate of Incorporation
Upon registration of the Memorandum and Articles, the CAC issues a certificate of incorporation.
1. Foreign Exchange (Monitoring & Miscellaneous Provisions Act Cap. F34 L.F.N. 2004
This legislation established an Autonomous Foreign Exchange market where transactions in foreign exchange are conducted. It is provided that no foreign currency imported into Nigeria will be seized or forfeited or expropriated by the Government except as provided under the Act.
Foreign currency from the following sources may be freely sold in the Market, that is -
(a) Foreign currency domiciliary accounts maintained in authorized banks in Nigeria
(b) Foreign currency held or imported by –
(i) Nigerian citizens returning home from any other place outside Nigeria,
(ii) Foreign nationals resident in Nigeria;
(c) Agency commissions, professional fees and other forms of invisible earnings;
(d) Non-oil export proceeds earned by exporters of Nigerian commodities;
(e) Foreign currency held by Nigerian citizens resident in Nigeria;
(f) Foreign currency imported by foreign nationals to purchase goods in Nigeria;
(g) Foreign currency imported or held by foreign Embassies, High Commissions and international organizations from external sources;
(h) Foreign currency held in external accounts by individuals, bodies corporate and unincorporate, commission agents, professional bodies, insurance companies and other similar bodies;
(i) Foreign currency imported by tourists in to Nigeria;
(j) Foreign currency provided by the Central Bank;
(k) Foreign currency imported for direct investment in Nigeria; and
(l) Foreign currency from such other sources as the Minister may, from time to time, specify by order published in the Gazette.
Nobody is required to declare any foreign currency at the port of entry into Nigeria unless its value is in excess of US $5,000 or its equivalent and even then, the amount that is declared is for statistical purposes only.
Any foreign currency purchased from the Market may be repatriated from Nigeria and shall not be subject to any further approval.
Nigerian Investment Promotion Commission Act Cap. N117 L.F.N. 2004 (NIPC Act)
Nigerian Investment Promotion Commission (NIPC) was set up by this legislation. It has a Governing Council consisting of a Chairman, a representative each from some Federal Ministries: section 2(2) NIPC Act. NIPC is the agency of the Federal Government that co-ordinates and monitors all investment promotion activities.
Prohibition:
For purposes of investments in Nigeria generally, and pursuant to NIPC Act there is no restriction except in the following areas which are prohibited to both Nigerians and Foreigners (negative list): -
(a) Production of arms, ammunition etc;
(b) Production of and dealing in narcotic drugs and psychotropic substances;
(c) Production of military and paramilitary wears including those of the police customs, immigration and prison services;
(d) Such other items as the Federal Executive Council may from time to time determine: see sections 18 and 32 NIPC Act
Application by Foreign investor:
A foreign investor must, after incorporation as a Nigerian company but before starting business, apply to the NIPC on the prescribed form for registration.
Documents to accompany the application to NIPC are:
• Government treasury receipt evidencing the purchase of NIPC Form;
• Certificate of Incorporation of the foreign company;
• Tax Clearance Certificate of the foreign company;
• Memorandum and Articles of Association;
• receipts of stamp duty on the authorised share capital of the company
• the Joint-Venture/ Shareholders agreement – this is not necessary if the business is wholly foreign owned;
• feasibility Report and Project Implementation Programme of a company for its proposed business.
• evidence of having sourced the plant and machinery to be used in the company’s business;
• Deed(s) of Sub-Lease/Tenancy Agreement for the premises to be used for the company’s operation.
• a list of the directors of the company; and their particulars including their nationalities;
• Job title designations of expatriate quota positions required, and the academic and working experience required for the occupants of such positions.
By section 20 (2) NIPC Act , the Commission shall within 14 working days from receiving a completed registration form register the enterprise if it is satisfied that all relevant documents for registration have been duly completed and submitted or otherwise advise the applicant accordingly.
Certificate of Capital Importation
Having obtained the requisite NIPC approvals, the foreign company (now registered as a Nigerian company) must then import its foreign equity holding through an authorized bank and obtain a certificate of Capital Importation from the bank. The capital importation could be in cash, consideration other than cash, e.g. importation of equipment or raw materials, or through the Debt equity conversion programme(see later).
The Certificate of Capital Importation from an authorized bank entitles the foreign investor to:
 Open a foreign currency Domiciliary Account
 Open a special non-resident Naira account to which all receipts from the capital inflows, proceeds from sale of securities, dividends and interests could be credited.
 Make investments in securities in Nigeria out of the balances in the naira account.
 Repatriate the capital, capital gains, dividends and incomes received by way of interests etc through authorised dealer at autonomous market rates subject to deductions of withholding and capital gains taxes [10]
ACQUISITION OF A FOREIGN ENTERPRISE AND PAYMENT OF COMPENSATION
No enterprise shall be nationalised or expropriated by the Federal Government, unless the acquisition is in the national interest or for public purpose; and no person who owns either wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other person.
However, The Federal Government can acquire a foreign enterprise if the acquisition is in the national interest or for a public purpose and under a law which makes provision for
(a) payment of fair and adequate compensation; and
(b) a right of access to the courts for the determination of the investor's interest or right and the amount of compensation to which he is entitled.
Any compensation payable under this section shall be paid promptly and in foreign exchange: [11]
Dispute settlement procedures
Where a dispute arises between a foreign investor and the Nigerian Government in respect of an enterprise, all efforts shall be made through mutual discussion to reach an amicable settlement.
Any dispute between an investor and any Government of the Federation in respect of an enterprise to which the Act applies which is not amicably settled through mutual discussions may be submitted at the option of the aggrieved party to arbitration as follows-
(a) In the case of a Nigerian investor, in accordance with the rules of procedure for arbitration as specified in the Arbitration and Conciliation Act Cap. A18 L.F.N. 2004 ; or
(b) In the case of a foreign investor, within the framework of any bilateral or multilateral on investment protection to which the Federal Government and the country of the investor are parties or in accordance with any other national or international machinery for the settlement of investment disputes agreed on by the parties: see for example [12]
In other cases, the International Center for Settlement of Investment Disputes Rules shall apply [13].
Debt- Equity Conversion Programme.
This entails the exchange of a country's foreign currency debt for local currency that can be used for:
(a) Establishment of new enterprises
(b) Purchase of shares in existing business concerns whether privately or publicly owned.
It is a feature of the deregulation programme introduced by the federal Military Government in 1988.
If for e.g. a foreigner needs to invest $30 million but he has only $10 millions, he can take his $10 million to any stock exchange anywhere in the world to buy Nigeria's debt instrument at a discounted value, i.e. he could pay $10 million for a debt instrument with a face value of $30 million and obtain the certificate at the face value and not the discounted value, the certificate is brought into Nigeria, taken to a Bank as proof of their capital importation into Nigeria, he can obtain the Naira equivalent of $30 million.
The programme is implemented by the Debt Conversion Committee (DCC) in Central Bank of Nigeria (CBN).
PARTICIPATION
To participate a company must have a minimum paid-up capital of N5,000,000.00 the minimum amount of debt to be considered under the Scheme shall be $250,000
APPLICATION PROCEDURE
Any company intending to participate in the programme must first obtain the prior consent or Approval-in-Principle From the DCC
Complete Form DCP/1
Support with docs certified by either a Court or Notary Public.
SUPPORTING DOCUMENTS
•Certificate of Incorporation
•Memorandum and Articles of Association of the beneficiary
•Feasibility Report(s)
•Three (3) Years Financial Statements of the beneficiary company
• Other related/useful documents which could facilitate decision making on the application.
REPATRIATION OF INCOME
It must be pointed out that the repatriation of the profits/capital dividends derived from the initial capital outlay can be done at any time
Immigration Act Cap. I1 L.F.N. 2004
These processes are cumbersome confusing and repetitive, but this is the law, so deserves consideration
Business Permit
An expatriate who intends to form or take over a company or practice a profession must obtain the consent of the minister of internal affairs [14], the processing is coordinated by NIPC
Visa: Cable Visa and Str Visa
If a company intends to employ an expatriate who is residing or living abroad, it can start by requesting for "Cable Visa Approval". This is granted only by the Comptroller-General of the Nigerian Immigration Service in which the Nigeria Foreign Mission (where the applicant is residing) is directed to issue a "Subject to Regularisation Visa" (S.T.R. VISA) to the applicant.
The approved Cable Visa serves as a confirmation that the Nigeria Immigration Service (NIS) has no objection to the coming in of the expatriate into Nigeria since it has been verified that the company employing him has vacant quota position set aside for the expatriate. The approved Cable Visa is transmitted through the Nigerian Telecommunication (NITEL) to the Foreign Mission.
The expatriate employee reports to the Nigeria Foreign Mission for the issuance of the STR visa. There, he will be given form IMM 22 and is requested to complete it and return with the prescribed documents.
After necessary scrutiny of the documents, the Immigration attaché will invite the applicant for interview. A qualified applicant will be granted the subject to regularization (STR Visa). The documents earlier submitted by the applicant are now vetted, enveloped and sent down to the Comptroller-General of Immigration in Nigeria.
Regularisation of Stay
This is synonymous with normalisation of stay and it simply means the person who is granted visa to visit Nigeria within three months on STR is to regularise the visa by changing his status from that of a visitor to that of a resident. He can regularise in one of two ways, at the point of arrival in Nigeria, the employee is required to present his passport to the Immigration Officer on duty. After proper official documentation the officer cancels the STR Visa (which is normally on a single journey) and place the expatriate on a three (3) months visitor pass. It is expected that the employee will regularise his stay within the validity period granted by the officer at the point of entry into the country.
Application for Regularisation
An applicant is also allowed by law to initiate processing of regularisation of stay from the Immigration Command of the state he is residing. In this case, the Comptroller of the Command who is the vicegerent of the Comptroller-General of Immigration there will direct opening of file in the name of the applicant after following some office procedures which includes confirmation of vacant quota position. A partial approval is granted by the Comptroller of the State Command and copies of the documents are forwarded to the Comptroller-General of immigration who in turn will approve the regularisation request. The documents will later on be sent back to the Comptroller who will issue the residence permit and the re-entry visa where applicable.
Expatriate quota
This is the permission given to a business concern to employ non-Nigerians in the numbers and capacities in the quota. Businesses with a capitalization of fifteen million Naira and above are now entitled to a maximum automatic quota of two positions while those with a capitalization of thirty million naira and above are entitled to four automatic quota positions. All other requests for expatriate quota are considered on merit.
Note that while the expatriate quota is issued to Nigerian and non-Nigerian companies the business permit is only relevant to businesses established by foreigners.
There are two types of quota,
Permanent until reviewed ("PUR") usually given to companies intending to have a foreigner as chairman or managing director of a company,
Temporary in nature and granted for a minimum period of 5 years in the first instance, but it is renewable
Combined Expatriate Residence Permit and Aliens Card (CERPAC)
The combined CERPAC scheme was introduced in 2002, providing for foreigners (except ECOWAS citizens accredited diplomats and children below the age of 15 years) working or living in Nigeria to carry CERPAC card, the scheme is expected to simplify the process of acquiring residence permit and alien registration certificate. It provides a computerized unit at various points of entries like airports, that is linked to a central database centre containing information on every foreigner residing in Nigeria. the residence permit allows a foreigner and his dependants or family to reside in Nigeria. This is in addition to the visa requirement as stated above, while every foreigner resident in Nigeria or visiting with the intention to remain in Nigeria for more than 56 days is required to register: [15]. Unlike the residence permit, the alien registration certificate is essentially a movement chart Under the CERPAC scheme, registration is valid for one year, after which application for revalidation must be made.
Foreigners relocating to a different part of Nigeria must inform the nearest Aliens Office of the move. Also if a foreigner holding an Aliens Card leaves Nigeria permanently then the Card has to be handed to the Aliens Office.
The annual fee is US$350. On payment and submitting the completed application form, a temporary receipt is given. This receipt should be carried at all times as proof of residence. Applicants will then be told when and where to collect their cards.
In conclusion, a foreigner doing business is required to have business permit, residence permit, alien registration card and visa (3 types). Only residence permit and alien registration have been combined.
Industrial Inspectorate Act Cap. I8 L.F.N. 2004
A company intending to incur capital expenditure must give notice of its intention to do so to determine its investment valuation The company will give notice to the Director of the Industrial Inspectorate Division of the ministry of industries, the Division shall then verify the information contained in the form on being satisfied that the valuation you have put on the capital equipment is the same as theirs then they will issue the company with a certificate of acceptance.
Personal Income Tax Act Cap. P8 L.F.N. 2004
This Act governs taxation of income of individual, family, communities and trustees.
Personal income tax is charged for each year of assessment on the aggregate global income of every taxable person for the year of assessment.
In practice, the majority of those paying personal income tax in Nigeria are in paid employment and subject to the Pay As You Earn Scheme (PAYE).
PAYE is not a separate tax. Rather, it is a form of collection of tax at source in order to reduce tax evasion. The employer is required by law to deduct the monthly tax liability of his employees at source and remit it to the relevant tax authority within 10 days of the end of each month failing which the employer will be liable to pay a penalty of 10% per annum of the tax due plus interest at the prevalent commercial rate.
OPERATING LICENCES
Apart from the requirement to register under CAMA, certain enterprises require approvals and/or licences to operate, e.g.
• A bank needs Central Bank of Nigeria licence; [16]
• An insurance company needs a licence from the National Insurance Commission is required [17],
• Oil companies are required to obtain Oil exploration licences, oil prospecting licences and oil mining leases. These licences are granted by the Department of Petroleum Resources [18] and,
• The telecommunications sector obtain licences from the Nigerian Communications Commission [19];
The detailed regulations identifying the various licences available and starting what is required to obtain each of them are numerous. It is therefore important to check with the relevant body.

SPECIFIC RELIEFS AND INCENTIVES
THE NATIONAL OFFICE OF TECHNOLOGY ACQUISITION AND PROMOTION (“NOTAP”) ESTABLISHED BY NATIONAL OFFICE FOR TECHNOLOGY ACQUISITION AND PROMOTION ACT CAP. N62 L.F.N. 2004
The Act was promulgated with the objective of monitoring, on a continuous basis, the transfer of foreign technology to Nigeria. The administration of the Act is entrusted to the National Office of Technology Acquisition and Promotion (“NOTAP”) The office examines the quality of imported technology with a view to determining its price and to check fairly obvious abuses (e.g. overpricing of real, fake or obsolete technology). In other words, the principal concern of NOTAP is to register contracts/agreements which deal with the transfer and acquisition of foreign technology and issue a certificate of approval or refuse registration of same. The obligation to register is both on the licensor and licencee of such technology.
INDUSTRIAL DEVELOPMENT (INCOME TAX RELIEF) ACT CAP I7 L.F.N. 2004: PIONEER STATUS:
This Act provides for a tax relief of three years, which is to commence on the production day of the company, and which may at the expiration of three years be extended for a period of two years, at one-year additional interval at a time or for a block two-year period. In all, there is a five-year tax holiday, subject to the restrictions contained in the law.
To qualify for the relief, the applicant must show that:
(a) The industry is not being carried on in Nigeria on a scale suitable to the economic development and requirements of Nigeria or at all, or there are favourable prospects for further developments in Nigeria of such industry.
(b) That it is of public interest to encourage a given industry by declaring it a pioneer industry.
(c) The industry must be listed as one eligible to be granted the status [20]
DOUBLE TAXATION
If a Nigerian company proves that it has paid or is, liable to pay tax, in a Commonwealth or another country that has double taxation bilateral treaty with Nigeria, then, such a company will be entitled to relief from tax paid or payable by it: [21]
CUSTOMS DRAWBACK REGULATIONS:
Importers of Materials used in the manufacture of exported goods may claim repayment of import duties earlier paid in respect of the materials under the Customs Duties (Dumped And Subsidised Goods) Act Cap. C48 L.F.N. 2004.
DUTY DRAWBACK SCHEME
The Duty Drawback Scheme is administered by the Duty Drawback Committee established under the Export (Incentives And Miscellaneous Provisions) Act Cap. 118 L.F.N. 1990 Act Cap. E19 L.F.N. 2004
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 products is more or less constant, and import prices (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 this 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 the producers/exporters who do not qualify under the fixed drawback facilities. It is therefore a straight forward traditional drawback mechanism under which any duty is paid on all imported inputs. The duties are subsequently, rebated on inputs used for export production.
Time Limit:
Duty Drawback application must be made within a maximum of two years from the date of exportation.

Tax exemption
1. The profits of any Nigerian company in respect of goods exported from Nigeria are exempted from taxation, provided that the proceeds from such export are repatriated to Nigeria and are used exclusively for the purchase of raw materials, plants, equipment and spare parts,
2. The profits of a company whose supplies are exclusively inputs to the manufacturing of products for export are exempted provided that the exporter gives a certificate of purchase of the inputs of the exportable goods to the seller of the supplier:

3. Dividend, interest, rent, or royalty derived by a company from a country outside Nigeria and brought into Nigeria through CBN or any bank: s 23 CITA
4. The interest on foreign currency domiciliary account in Nigeria accruing on or after 1st January 1990.”
5. the profits of any company engaged in the following biz i.e. registered friendly society charitable or educational, sporting activities a trade union in so far such profits are not derived from a trade or business carried on by such company;
6. dividend distributed by Unit Trust and Government organisations
7. dividend received from small companies in the manufacturing sector in the first five years of operation.
8. dividend received from investments in wholly export – oriented businesses;
9. A new company going into the mining of solid minerals shall be exempt from tax for the first three years of its operation: .
10. 25% of incomes in convertible currencies derived from tourists by a hotel shall be exempt from tax provided that such income is put in a reserved fund to be utilised within five years for the building expansion of new hotels, conference centres and new facilities for the purpose of tourism development:
11. Interest on any loan to a company engaged in agricultural business, the fabrication of local plant or machinery or as working capital for any cottage industry established under Family Economic Advancement Programme Establishment, Etc.) Act Cap. F3 L.F.N. 2004 is exempt from tax provided the moratorium is not less than eighteen months and the rate of interest on the loan is not more than the base lending rate at the time the loan was granted. .
12. Foreign loans S.11 CITA
Where during any calendar year after January 1, 1971, any loan of an amount (or of any aggregate amount) of not less than N150, 000 is granted by a foreign company to any person in Nigeria for the purpose of carrying on a trade, business or vocation, any interest derived by the foreign company shall be exempted from tax as follows:-
Repayment period Tax exemption
10 years and above 100%
5-10 years 50%
Interest on foreign loans granted after April 1, 1978 will be exempted as follows: -
Repayment period including moratorium Moratorium period • Tax exemption
Above 7 years Not less than 2 years 100%
5-7 years Not less than 18 months 70%

2-4 years Not less than 12 months 40%
Below 2 years Nil Nil
In order to enjoy the above incentives, the agreement for all foreign loans must be approved by the Federal Ministry of Finance and copies thereof deposited with both Federal Ministry of Finance and Federal Board of Inland Revenue.
INVESTMENT TAX CREDIT
• Companies that are engaged in research and development activities for commercialisation are allowed 20% investment tax credit on their qualifying expenditure:
• A crude oil producing company which executed a Production Sharing Contract with the Nigerian National Petroleum Corporation in 1993 shall, throughout the duration of the Production Sharing Contract, be entitled to claim a petroleum investment allowance as an offset against tax in accordance with the provisions of the Production. The petroleum investment allowance rate is fifty per cent flat rate of chargeable profit for the duration of the Production Sharing Contract.
• A company which engages wholly in the fabrication of spare parts, tools and equipment for local consumption and export shall be allowed 25% investment tax credit on its qualifying capital expenditure:
• A company, which purchases a locally manufactured plant, machinery or equipment for use in its business, is allowed 15% investment tax credit on such fixed asset.
• Where a company has incurred an expenditure for the replacement of an obsolete plant and machinery, there shall be allowed to that company, 15% investment tax credit
BONUS FOR FILING RETURN ON TIME
A company which files return within the time stipulated for filing is granted a bonus one percent of the tax payable.
RURAL INVESTMENT ALLOWANCE
When a company incurs capital expenditure in a rural area on the provisions of facilities such as electricity, water, tarred road and telephone, located at least 20 kilometres away from such facilities, the company is entitled to rural investment allowance . The rates are:
Level of development Rate
No facilities 100%
No electricity 50%
No water 30%
No tarred road 15%
No telephone 5%
EXPORT FREE ZONE
The enabling law for the establishment and management of the Export Processing Zone (EPZ) Scheme in Nigeria is the Nigerian Export Processing Zones Act, Cap. N107 L.F.N. 2004. There is currently one Export Processing Zones at Calabar and one Export Free Zone at Onne/Ikpokiri’.
The Calabar EPZis a multi-functional industrial complex while the Onne EPZ is dedicated to oil and gas .
All goods consigned to all the export processing zones and export processing factories shall be imported into Nigeria duty free .
The, profit or gains of a 100% 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 –
i. The undertaking is not formed by splitting or breaking up or reconstructing a business already in existence;
ii. It manufactures, produces and exports articles during the relevant year and the export proceeds form 75% of its turnover;
iii. 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% of the total value of the machinery or the undertaking;
iv. The undertaking repatriates at least 75% of the export earnings to Nigeria and places it in a domiciliary account in any registered and licenced bank in Nigeria:
EXPORT EXPANSION GRANT FUND SCHEME ("EEGF")
The Export Expansion Grant Scheme provides for cash inducement to exporters who have exported a minimum of five hundred thousand Naira (N500, 000) worth of processed products. .
Such Exporters are entitled to 4% grant on their total annual export turnover subject to the receipt of confirmation of repatriation of export proceeds by the CBN.
Procedure:
(a) Application Forms for the scheme could be obtained from the Headquarters of the Nigeria Export Promotion Council (NEPC) or any of its Zonal Offices at Lagos, Port-Harcourt, Enugu, Jos, and Kano. All forms should be accompanied with the sum of N5, 000 (Five thousand Naira) in bank drafts payable to the Nigeria Export Promotion Council Headquarters, Abuja, as non-refundable fees for the application forms.
(b) The NEPC Committee on Export Expansion Grant reserves the right to approve or reject an application and could subject a company for inspection to confirm the status of the export product(s).
(c) Please not that, to facilitate the administration of the scheme Government has approved the deduction of a 10% processing fee on each grant approved.
NIGERIAN EXPORT-IMPORT BANK ("NEXIM")
A foreign investor should know about NEXIM that was established under Nigerian Export- Import Bank Act Cap. N106 L.F.N. 2004
The Nigerian Export-Import Bank (NEXIM)) has been set up to provide foreign currency to exporters either directly or through commercial and merchant banks in support. Nigerian -Export-Import Bank offer an array of financial facilities in support of non-oil exports, including Re-discounting and Refinancing Facility of Export (RRF), Export Credit Guarantee Facility Export Credit Insurance Facility and the Industrial Export Stimulation Facility
ECOWAS TRADE LIBERALISATION SCHEME
The Scheme provides for trade Liberalization among member countries.
It involves total exemption of duties and taxes;
Free movement of products free from any qualitative restriction;
Adoption of a single currency, the ECO, now slated for 2009.
ABOLITION OF EXCISE DUTY
All excise duties were abolished with effect from the 1st of January, 1999.

LABOUR INTENSIVE MODE OF PRODUCTION:

Tax concession for five years. the rate is graduated in such a way that an industry employing one thousand persons or more will enjoy 15% tax concession while an industry employing one hundred will enjoy only 6%, while those employing two hundred will enjoy 7%, and so on.
EXPORT DEVELOPMENT FUND (EDF)
EDF is a special fund (established under section 4 of the Export (Incentives and Miscellaneous Provisions) Act Cap. E19 L.F.N. 2004 under which the government is to give financial assistance to exporting companies to cover part of their initial expenses in respect of export promotion activities including training courses, symposia, seminars and workshops, research, advertising and publicity campaigns


Toun Adebiyi, LL.M (Lond) Director and Head of Academics Nigerian Law School, (Lagos)

See SOLANKE V. ABED, 1962 1 ANLR 230 .

Section 56 (1) CAMA

Section 56 Of CAMA

Section 29 Of CAMA

Section 32
Section 34 of CAMA

For Court Processes – See The Rules Of Court Of The State Where The Company Is Situated; For Other Documents, They May Be Served On The Company By Leaving It At, Or Sending It By Post To The Registered Office Or Head Office Of The Company. Section 78
See Stamp Duties Rates (Reviewed) 2002 For Reviewed Stamp Duties Rates

See Rule 212 Of The Rules And Regulations Pursuant To Investments And Securities Act Cap I24 L.F.N. 2004

Section 25(3) NIPC Act.

The United Nations Commission On International Trade Law (UNCITRAL) Conciliation Rules Of 1980.

Lagos Regional Centre For International Commercial Arbitration Under The Auspices Of The Asian-African Legal Consultative Committee In Cooperation With Nigerian Government. Its Purpose Is To Provide For Commercial Dispute Settlements Between Parties Within The Asian African And Pacific Sub Region. Other Regional Centers Are Malaya, Egypt, The Centre Was Established By Force Of Law, REGIONAL CENTRE FOR INTERNATIONAL ARBITRATION ACT CAP. R5 L.F.N. 2004
Section 34 Immigration Act Cap. I1 LFN 2004; See Santos M. Batalha V. West Construction Co. Ltd. [2001] 18 N.W.L.R. (Pt. 744) 95 And OILFIELD SUPPLY CENTRE LIMITED V JOSEPH LLOYD JOHNSON(1987) 2 NWLR (Pt.58)’625

See Immigration (Control Of Aliens) Regulations L.N. 94 1963
See Central Bank Of Nigeria Act Cap. C4 L.F.N. 2004
See INSURANCE ACT NO.1 2003

See Petroleum Act Cap. P10 L.F.N. 2004
See Nigerian Communications Commission Act 2003
See AID TO PIONEER INDUSTRIES (NO. 1) ORDER L.N.2 1958 ;AID TO PIONEER INDUSTRIES (NO. 2) ORDER L.N.38 1958
And INDUSTRIAL DEVELOPMENT (LIST OF PIONEER INDUSTRIES (S.I. 9)1982

See Sections 33-35 Companies Income Tax Act Cap. C21 L.F.N. 2004 And Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of Canada Order S.I. 17 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of Canada Order S.I. 17 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of French Republic Order S.I. 16 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of Islamic Republic Of Pakistan Order S.I. 14 1997 ; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of Romania Order S.I. 18 1997 ; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of The Kingdom Of Belgium Order S.I. 15 1997 ; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of The Kingdom Of Netherlands Order S.I. 19 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of The Kingdom Of Netherlands Order S.I. 19 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The United Kingdom Of Great Britain And Northern Ireland) Order S.I.11 Of 1988

See Section 23 Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 20.-(1) Petroleum Profits Tax Act Cap. P13 L.F.N. 2004
See Section 30 Of Companies Income Tax Act Cap. C21 L.F.N. 2004 of Companies Income Tax Act CAP. 60 L.F.N. 1990; section 22(3) of Companies Income Tax Act CAP. 60 L.F.N. 1990
See Section 26 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

Section 56 Of Companies Income Tax Act Cap. C21 L.F.N. 2004
See Section 34 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Oil And Gas Export Free Zone Act Cap. O5 L.F.N. 2004
See Customs Tariff (Exemption) Order 2001 S.I. 18 2001
See Section 35 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 36 Of Companies Income Tax Act Cap. C21 L.F.N. 2004
section 28D of Companies Income Tax Act CAP. 60 L.F.N. 1990" See Section 37 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 38 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 11 Of CITA

See Section 11 Of CITA
Export (Incentives and Miscellaneous Provisions) Act Cap. E19 L.F.N. 2004
See Petroleum Profits Tax Act CAP. P13 L.F.N. 2004
See Section 19(1)(O)) CITA
See Section 19(1) (G)) of CITA TA \l "section 22(3) of Companies Income Tax Act CAP. 60 L.F.N. 1990"
[8] For Court Processes – See The Rules Of Court Of The State Where The Company Is Situated; For Other Documents, They May Be Served On The Company By Leaving It At, Or Sending It By Post To The Registered Office Or Head Office Of The Company. Section 78
STAMP DUTIES RATES (REVIEWED) 2002
[10] See Rule 212 Of The Rules And Regulations Pursuant To Investments And Securities Act Cap I24 L.F.N. 2004

[11] Section 25(3) NIPC Act.

[12] The United Nations Commission On International Trade Law (UNCITRAL) Conciliation Rules Of 1980.

[13] Lagos Regional Centre For International Commercial Arbitration Under The Auspices Of The Asian-African Legal Consultative Committee In Cooperation With Nigerian Government. Its Purpose Is To Provide For Commercial Dispute Settlements Between Parties Within The Asian African And Pacific Sub Region. Other Regional Centers Are Malaya, Egypt, The Centre Was Established By Force Of Law, REGIONAL CENTRE FOR INTERNATIONAL ARBITRATION ACT CAP. R5 L.F.N. 2004
[14] Section 34 Immigration Act Cap. I1 LFN 2004; See Santos M. Batalha V. West Construction Co. Ltd. [2001] 18 N.W.L.R. (Pt. 744) 95 And OILFIELD SUPPLY CENTRE LIMITED V JOSEPH LLOYD JOHNSON(1987) 2 NWLR (Pt.58)’625

[15] See Immigration (Control Of Aliens) Regulations L.N. 94 1963
[16] See Central Bank Of Nigeria Act Cap. C4 L.F.N. 2004
[17] See INSURANCE ACT NO.1 2003

[18] See Petroleum Act Cap. P10 L.F.N. 2004
[19] See Nigerian Communications Commission Act 2003
[20] See AID TO PIONEER INDUSTRIES (NO. 1) ORDER L.N.2 1958 ;AID TO PIONEER INDUSTRIES (NO. 2) ORDER L.N.38 1958
And INDUSTRIAL DEVELOPMENT (LIST OF PIONEER INDUSTRIES (S.I. 9)1982

[21] See Sections 33-35 Companies Income Tax Act Cap. C21 L.F.N. 2004 And Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of Canada Order S.I. 17 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of French Republic Order S.I. 16 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of Islamic Republic Of Pakistan Order S.I. 14 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of Romania Order S.I. 18 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of The Kingdom Of Belgium Order S.I. 15 1997; Double Taxation Relief (Between The Federal Republic Of Nigeria And The Government Of The Kingdom Of Netherlands Order S.I. 19 1997;Double Taxation Relief (Between The Federal Republic Of Nigeria And The United Kingdom Of Great Britain And Northern Ireland) Order S.I.11 Of 1988

See Section 23 Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 36 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 37 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 11 Of CITA

Table 1 of Schedule 3 to the Companies Income Tax Act
See Section 20.-(1) Petroleum Profits Tax Act Cap. P13 L.F.N. 2004
See Section 38 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Section 30 Of Companies Income Tax Act Cap. C21 L.F.N. 2004
See Section 26 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

Section 56 Of Companies Income Tax Act Cap. C21 L.F.N. 2004
See Section 34 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

See Oil And Gas Export Free Zone Act Cap. O5 L.F.N. 2004
See Customs Tariff (Exemption) Order 2001 S.I. 18 2001
See Section 35 Of Companies Income Tax Act Cap. C21 L.F.N. 2004

Export (Incentives and Miscellaneous Provisions) Act Cap. E19 L.F.N. 2004

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