FOREIGN PARTICIPATION IN NIGERIAN BUSINESS

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FOREIGN PARTICIPATION IN NIGERIAN BUSINESS

how to obtain a business permit in Nigeria

how to obtain a business permit in Nigeria

INTRODUCTION
Foreign participation also means alien participation. Section 650 of Companies and Allied Matters Act (CAMA) defines an alien as a person or association, whether corporate or incorporated, other than a Nigerian citizen or association.
Section 20(4) of CAMA provides:

Subject to the provisions of any enactment regulating the rights and capacity of aliens to participate or undertake in a trade or business, an alien or a foreign company may join in forming of a company.
Section 17 of Nigerian Investment Promotion Commission (NIPC) further provides that:

A non-Nigerian whether company or individual may invest and participate in the operation of any enterprise in Nigeria except those in the negative list. The negative list includes arms and ammunition; narcotic drugs and psychotropic substance; para-military and military wears and accoutre.

It is therefore clear from the above provisions that a foreigner is allowed to participate in a business in Nigeria but subject to some enactments.
An alien (foreigner) may choose to register a business name as a sole proprietor (or partnership), or he may wish to incorporate a company with other aliens or Nigerians, or he may wish to buy shares into an existing company.
Where an alien is incorporating a company, he may do business in any area except the negative list. The negative list includes arms and ammunition; narcotic drugs and psychotropic substance; para-military and military wears and accoutre.
Meanwhile, every foreigner seeking to participate in Nigerian business by registering a company in Nigeria must register a company with the minimum of 10,000,000 authorized shares capital to be able to subsequently register with NIPC.

• NIGERIAN IMMIGRATION
Nigerian Immigration Service is one of the most important government agencies relevant to investors seeking to do business in Nigeria. Any investor seeking to do business in Nigeria must also consider about immigrating to the country or sending workers to the country from abroad. Nigerian Immigration Service, together with the Nigerian Ministry of Interior cater to the immigration requirements of the foreigners.
As part of regulatory requirements, foreign investors and offshore companies doing business or looking to establish in Nigeria must obtain Expatriate Quota from the Minister of Interior. Immigrant workers are required to obtain residence permits that allow them to work in Nigeria and remit their salaries abroad if necessary. Additionally, a wholly owned company by a foreigner must also obtain Business Permit in Nigeria to commence business transactions in Nigeria.

• Expatriate Quota
It is the authorization to a company to employ individual immigrants to specifically approved job designations, and also specifying the permissible duration of such employment. The expatriate quota is the work permit for expatriate employees to fill the expatriate quota obtained by the employer company.
• Types of Visas and Permits
There are two types of visas that may be granted, depending on the length of stay. For short-term assignments, an employer must apply for and receive a temporary work permit, allowing the employee to carry out some specific tasks. The temporary work permit is a single-entry visa and expires after 90 days. There are no numerical limitations on short-term visas, and foreign nationals who meet the conditions for grant of a visa may apply for as many short-term visas as required.
For long-term assignments, the employer needs a “subject-to-regularization” visa (STR). To apply for an STR, an employer must apply for and obtain an expatriate quota. The expatriate quota states positions in the company that will be occupied by expatriate staff. Upon arrival in Nigeria, the employee will need to validate his or her visa by applying for a residence permit.
Spouses of authorized workers may also work in Nigeria, provided they obtain a work and residence permit as well. Nigeria does not employ a labour market test, although the Nigerian Content Act does state that employers should exercise a preference for local employees.
• Residence Permit
It is granted to a foreigner who visited Nigeria using the Subject to Regularization (STR) Visa. The foreigner is required to change his status from a visitor to a resident by obtaining a Residence Permit. Residence Permit has a validity period of two years and is renewable. However, a foreigner who has imported an annual minimum “threshold of capital” over a period of time may be issued a Permanent Residence Permit in so far as the investment capital is not withdrawn and the foreigner has complied with any other condition prescribed for the issuance of the Permanent Residence Permit.
• CERPAC
CERPAC is the acronym for Combined Expatriate Residence Permit and Aliens Card. The Nigeria Immigration Service requires foreigners living in Nigeria to get the new CERPAC or they will be considered to be illegal residents and subject to repatriation from Nigeria.
Persons that qualify for this are Expatriates resident or working in Nigeria, and exempted persons are Diplomats, Government Official (GO’s), Niger-wives, Non-Governmental Organization (NGO’s) are to be issued CERPAC Gratis.
• ECOWAS Nationals
They have a right of entry into Nigeria for a ninety (90) day validity period and must register with the Nigerian Immigration Service and be issued Residence Card to be eligible to do business or work in Nigeria.
• INCENTIVES AVAILABLE FOR DOING BUSINESS IN NIGERIA.
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, others are limited to some specific sectors. The nature and application of these incentives have been considerably simplified.
Apart from easy immigration process put in place by the Nigerian government, some of the other incentives for doing business in Nigeria include:
• Companies Income Tax
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%.
• Pioneer Status Incentive
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)
• Capital Importation and Repatriation
To fund their investments in Nigeria, foreigners are free, subject to money laundering restrictions, to bring in any recognized foreign currency into Nigeria. Such funds will have to be brought in through an authorized dealer. 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.
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).
Investment in Infrastructure
This is a form of incentive granted to industries that provide facilities that ordinarily, should have been provided by the government. Such facilities include access roads, pipe borne water and electricity. Twenty per cent (20%) of the cost of providing these infrastructural facilities, where they do not exist, is tax deductible.
• 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 the 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 overpayment made.
• Double Taxation Agreements
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”.

➢ CONCLUSION
The Government of Nigeria has to a large extent gone to great length in providing the enabling environment for foreign participation in businesses in Nigeria to thrive, although there are still much that can be done to fully attract investors into the country.

However, considering the friendly immigration process, abundance human and natural resources, capital repatriation and tax incentives, foreigners seeking to do business in Nigeria can be looking forward to a good business environment and profit return on their investments.

 

Written by Corporate & Commercial Law Team at Resolution Law firm, Nigeria
Tel: ` +2348099223322
Email: info@resolutionlawng.com

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