EEL Amount and Payment Cycle

An annual sum of $15,000.00 (Fifteen Thousand USD) is payable for each director and an annual sum of $10,000 (Ten Thousand USD) is payable for other categories of expatriates. This payment applies to any expatriate that is employed for 183 days or more.

Liability to pay the EEL

There appears to be no distinction on the size of the company and any company which employs expatriates (defined as non-Nigerians citizens) within Nigeria are liable to pay the EEL. This includes multinational companies, small and medium size enterprises (SMEs).

EEL Coverage

The EEL applies to private sector companies utilizing foreign workforce or relying on expatriate labour. These companies include but not limited to construction, agriculture, oil and gas, telecommunication, maritime and shipping, etc. It should be noted that the coverage of the EEL is in no way limited to the aforementioned industries as the coverage covers all industries engaging expatriate talent.

Duration of Residency/Employment

To be liable to pay the EEL, an expatriate worker must have been employed for a period not less than 183 days within a year. The 183 days may be calculated and spread across a period exceeding one fiscal year.

An employer would still be liable to pay the EEL in a situation where the expatriate is temporarily seconded or assigned to work in a foreign country provided the concerned expatriate occupies a Quota Position in a company operating in Nigeria.

Exemption from the EEL

The EEL does not apply to all accredited staff of diplomatic missions and government officials.

The Role of the Nigerian Immigration Service (NIS)

The NIS is responsible for determining the expatriates which fall within the purview of EEL. It is also responsible for enforcing the EEL in line with the provisions of the Nigerian Immigration Act, 2015 and the applicable Nigerian Visa Policies.

Reporting and Compliance

The Government is required to provide online platforms for employers of expatriates in Nigeria to report employment details of expatriates electronically.

Both the employers and expatriate employees have reporting and compliance obligations. Employers are required to maintain comprehensive records which include salary details, work permits, etc. on expatriate employees. The employers are also mandated to provide timely reports to government and notify any change in expatriate employment circumstances to the appropriate government agencies. There is also a need for employers to comply with filing deadlines.

The expatriate employee has the responsibility to ensure that accurate personal information and employment details are reported to employers and government.

Compliance Audits

The government agencies responsible for EEL enforcement may conduct compliance audits for accuracy of information provided to it and may also crosscheck the information provided with data from other sources such as immigration records and tax filings.

Offences, Sanctions and Penalties

Sanctions and penalties have been provided for various infractions relating to the EEL as follows:

1. Providing false information, returns, statements or representations to an immigration officer is punishable with imprisonment for a term of five years or a fine of N1,000,000 or both.
2. Failure to file EEL within 30 days attracts a fine of N3,000,000
3. Failure to register new employees within 30 days attracts a fine of N3,000,000.
4. Submission of forged or falsified information attracts a fine of N3,000,000.
5. Failure to renew EEL within 30 days to the expiry date attracts a fine of N3,000,000.

Conclusion

The EEL has been introduced to regulate and balance the benefits of expatriate employment with the protection of Nigeria’s local labour markets. The EEL is payable by any company employing expatriate employees in Nigeria. The EEL is enforced by the NIS and there are reporting and compliance obligations imposed on employers and expatriate employees. Sanctions and penalties also apply where there is a failure to comply with obligations imposed by the EEL handbook.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post What you Need to Know about the New Nigeria Expatriate Employment Levy first appeared on Goldsmiths Solicitors.

2022 has been an incredibly busy and exciting year in the Nigerian legal and regulatory environment. There were major and far-reaching changes ushered in by the regulatory authorities particularly the Central Bank of Nigeria (CBN). There were also major developments relating to Banking and Finance, Competition and Consumer Protection, Startups, Capital Markets, Insolvency, etc. In this article, we have highlighted some of the major legal, regulatory, and judicial changes that occurred in 2022. This article is divided into four parts representing four quarters of the year. In each quarter, we deal with all the major legal changes that occurred therein.

1^st Quarter (January – March 2022)

A remarkable feature of the first quarter was the issuance of regulations/guidelines by the CBN. Within this period, the Electoral Act 2022 was also signed into law by the President. The new Electoral Act introduced important changes to the conduct of elections Nigeria. Below are some of the highlights of the 1^st quarter:

• The Central Bank of Nigeria (CBN) Guidelines on the Introduction of E-evaluator, e-invoicing for Import and Export in Nigeria. Although the Guidelines were issued in January, it became operative on 1 February 2022 and requires the submission of an electronic invoice authenticated by the Authorised Dealer Bank for all import and export operations. The electronic invoice replaces the usual hardcopy final invoice.
• On 11 January 2022, President Muhammadu Buhari approved the establishment of the Nigerian Diaspora Investment Trust Fund, a private sector investment window for Nigerians in the diaspora to support direct investments in the country.
• On 18 January 2022, the Lagos State Government introduced the Consolidated Informal Transport Sector Levy to harmonize the taxes paid by transporters to the state government.
• On 26 January 2022, the Federal High Court in the case of Attorney General of Rivers State v. Attorney General of Federation and 3 Others, invalidated deductions by the Federal Government from the Federation Account for funding the Nigeria Police Trust Fund.
• The Central Bank of Nigeria Operating Guidelines for RT200 Non-Oil Export Proceeds Repatriation Rebate Scheme. This is a programme designed and introduced by the CBN to incentivize exporters in the non-oil export sector with the goal of raising $200 billion in FX over the course of the next three years.
• The Central Bank of Nigeria Guidelines for Regulation and Supervision of Credit Guarantee Companies in Nigeria. The Guidelines seeks to ensure a conducive environment for Micro, Small and Medium Enterprises (MSMEs) to be able to access credit at low interest rates from banks and financial institutions. The requirements for obtaining a license and also the activities which are permitted and not permitted by the license are contained in the Guidelines.
• On 7 February 2022, the Lagos State Governor signed the Lagos State Real Estate Regulatory Authority Bill into Law. The law introduced significant changes to the real estate landscape in Lagos State by mandating the registration of real estate practitioners.
• Electoral Act (Amendment) Act 2022 (the Electoral Act). The new Electoral Act was signed into law on 25 February 2022 by President Muhammadu Buhari. The Electoral Act empowers the Independent National Electoral Commission (INEC) to transmit election results electronically. Section 84 (12) of the Act, prohibits appointees of government, government officials from holding office while vying or contesting at party primaries.
• On 4 March 2022, the CAC stated in a circular that schools and other institutions would no longer be registrable as business names. This means they can now only be registered as a company pursuant to the Companies and Allied Markets Act 2020.
• On 23 March 2022, the Nigerian Communications Commission (NCC) issued the License Framework for the Establishment of Mobile Virtual Network Operators in Nigeria.

2^nd Quarter (April – June 2022)

This quarter witnessed a high level of enactment of laws and the issuance of regulations by the regulatory authorities. Importantly, three laws were passed to deal with the issues of corruption and terrorism in Nigeria. One of these laws (Money Laundering [Prevention and Prohibition] Act 2022) prompted the issuance of a guidelines by the CBN to bring its AML/CFT regulations in compliance with the requirements of the new law. The Securities and Exchange Commission (SEC) also issued a guideline to regulate digital and virtual assets. Below are some of the highlights of the 2^nd quarter:

• On 6 April 2022, the President signed Executive Order 11 which mandates government to institutionalize maintenance of public buildings. The National Biotechnology Development Agency Act, 2022 was also signed on the same day. The law provides the legal framework for the established agency to carry out research and create public awareness in biotechnology to encourage private sector participation.
• On 24 April 2022, the Corporate Affairs Commission announced the approval of the Insolvency Regulations 2022 by the Minister of Industry, Trade and Development. The regulations govern insolvency proceedings under the Companies and Allied Matters Act 2020.
• On 12 May 2022, the President signed the Money Laundering (Prevention and Prohibition) Act, 2022, the Proceeds of Crime (Recovery and Management) Act, 2022, and the Terrorism (Prevention and Prohibition) Act, 2022.
• The Central Bank of Nigeria Exposure Draft Guidelines for Open Banking in Nigeria. These Guidelines are aimed at enhancing competition and innovation in the banking system. It established the principles for data sharing across the banking and the payments system and broadened the range of financial products and services available to bank customers.
• The Central Bank of Nigeria Guidelines for the Registration and Operation of Bank Neutral Cash Hubs (BNCH) in Nigeria. The Guidelines are aimed at  reducing the risks and cost borne in the course of cash management and to also enhance cash management efficiency. The registration of a BNCH is to be undertaken in two stages of obtaining CBN Approval-in-Principle and final approval. The BNCH are to be licensed to take deposit and disburse high volume cash on behalf of financial institutions but cannot carry out lending activities, receive or disburse foreign currency or sub-contract their operation.
• Revised Guidelines for the Operation of Non-Interest Financial Institutions’ Instruments by the Central Bank of Nigeria. These Guidelines replaced the 2012 Guidelines and were issued to regulate the issuance of non-interest instruments by Non-Interest Financial Institutions (NIFIs) while also stipulating the requirements and terms of operation for NIFIs.
• The Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022. The CBN issued the Regulations to bring its regulations on anti-money laundering and combatting the financing of terrorism to be in compliance with the Money Laundering (Prevention and Prohibition) Act, 2022 and safeguard the financial institutions from being used for financial crimes.
• The Securities and Exchange Commission issued the Rules on the Issuance, Offering Platforms and Custody of Digital Assets. The Rules were issued by SEC on 13 May 2022 and provide for the issuance of digital assets, registration requirements for Digital Assets Offering Platforms (DAOPS) and Digital Assets Custodians (DAC) among others.
• On 25 May 2022, the Federal High Court in the case of Femi Davies v. National Broadcasting Commission, nullified the National Broadcasting Code (6^th Edition) through which the National Broadcasting Commission (NBC) sought to regulate the practice of advertising in Nigeria. The court held that it was beyond the power of the NBC to regulate advertisement.

3^rd Quarter (July – September 2022)

The regulatory authorities in the banking and finance sector, particularly the CBN, were very active in issuing one form of guidelines or the other. The Federal Competition and Consumer Protection Commission (FCCPC) issued a guideline to regulate the activities of digital money lenders after a series of predatory practices by many digital money lenders. There was also a judgement of the Court of Appeal which re-affirmed the power of the Federal Inland Revenue Service to collect VAT from hoteliers. Below are some of the highlights of the 3^rd quarter:

• The Central Bank of Nigeria Review of the Industry Quick Response (QR) Code Presentment Options. The review was done by the CBN to enhance the flexibility offered by the use of QR codes in payments. The review provides that the implementation of the QR code for payments shall be based on either merchant-presented or consumer-presented modes.
• The Central Bank of Nigeria Exposure Draft on the Digital Financial Services Awareness Guidelines. This was developed to address gaps in consumer knowledge and practices with Digital Financial Services (DFS). The Guidelines provides for a set of principles and expectations for financial service providers to integrate in the provision of DFS to ensure consumer understanding, good treatment and positive outcomes.
• On 1 July 2022, the Court of Appeal set aside the judgement of the Federal High Court in the case of The Registered Trustees of Hotel Owners and Managers Association of Lagos v. Attorney General of Lagos State which invalidated the powers of the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT) from hoteliers and held that the collection of the tax is in the purview of the state government. The Court of Appeal has now held that it is the FIRS that has the authority to collect VAT. See Federal Inland Revenue Service v. The Registered Trustees of Hotel Owners and Managers Association of Lagos.
• Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022. The regulations were issued by the FCCPC on 18 August 2022 to provide the FCCPC’s approach to regulating the digital lending space and makes provisions for the requirements for approval/registration to carry out the business of digital lending in Nigeria. Thus, by this Framework and Guidelines, institutions engaged in digital lending activities are to be registered with the FCCPC.
• The Revised Handbook on Expatriate Quota Administration 2022 (the Revised Handbook). On 31 August 2022, the Federal Ministry of Interior announced the issuance of the Revised Handbook. The Handbook increased the minimum share capital requirement of a company wishing to apply for business permit from N10,000,000 to N100,000,000. It also reduced the lifespan of Expatriate Quotas (EQs) from ten to seven years. However, the provisions of the Handbook are yet to be operational.
• The Advertising Regulatory Council of Nigeria (ARCON) banned the use of foreign voice-over artists and models on any advertisement which targets the Nigerian advertising space. The ban took effect on 1 October 2022.

4^th Quarter (October – December 2022)

The Nigeria Startup Act was enacted during this quarter, and it represents a remarkable achievement towards incentivizing startups in Nigeria through the incentives and programmes dedicated to spur the growth of startups in Nigeria. A sport policy was also developed and approved with the motive to position the sport sector to generate revenue while standardizing it. The CBN was also active with the issuance of several guidelines and regulations to regulate players in the Nigerian financial services sector. Below are some of the highlights of the 4^th quarter:

• Exposure Draft Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria. The Guidelines stipulate how a representative office of foreign banks can be licensed in Nigeria. It enumerates the activities they can validly engage in in Nigeria such as marketing the products and services of their foreign parent or affiliate and states that they cannot engage directly in any financial transaction.
• Exposure Draft Guidelines on Contactless Payments in Nigeria. The Guidelines provide the minimum standards and requirements for the operation of contactless payments and specified the roles of stakeholders such as acquirers, issues, payment schemes, merchants, etc.
• Nigeria Startup Act 2022. On 19 October 2022, the Nigeria Startup Act, 2022 was signed into law. The law aims to provide an enabling environment for the establishment, development, and operation of startups in Nigeria and to position Nigeria’s startup ecosystem as the leading digital technology centre in Africa.
• National Sports Industry Policy (NSIP) 2022 – 2026. On 2 November 2022, the Federal Executive Council (FEC) approved the National Sports Industry Policy (NSIP) 2022 – 2026. The policy contains provisions on governance regulations, infrastructure development plans, incentives for private investors, etc. aimed at standardizing the Nigerian sport sector and thereby generating revenue.
• CBN Naira Redesign Policy – Revised Cash Withdrawal Limits. Citing the need to combat fraud, corruption, terrorism and to ensure that most of the money in circulation are within the banking vault, the CBN issued the policy document on 6 December 2022 to reduce the daily and weekly cash withdrawal limit and also to introduce certain requirements for withdrawing across the counter beyond the set limit at the rate of 5% fee for individuals and 10% for corporate organizations. The revision of the cash withdrawal limits was done by the CBN pursuant to the recent redesign of the Nigerian currency i.e. N200, N500 and N1,000 notes. Coming less than three months before the next general elections in Nigeria, this policy has received a lot of resistance from the political class.

Conclusion

2022 has been a remarkable year in the Nigerian legal and regulatory space and saw the enactment of the Start Up Act, the redesign of the Naira and the introduction of far-reaching regulations especially by CBN aimed and tackling corruption, fraud and financial crimes.

We use this opportunity to wish all our clients a very Merry Christmas and best wishes for the New Year 2023. Thank you all for your support.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post Goldsmiths Solicitors – Legal Recap for the Year 2022 first appeared on Goldsmiths Solicitors.

On 31 December 2021, the Nigerian President signed the Finance Act 2021 (the Act) into law. The Act came into effect on 1 January 2022. The Act amends various tax laws in Nigeria such as the Capital Gains Tax Act, the Companies Income Tax Act, the Customs, Excise Tariffs, Etc. (Consolidation) Act, the Federal Inland Revenue Service (Establishment) Act, Personal Income Tax, Insurance Act, etc.

In this article, we consider the recent changes which were brought in by the Act, aimed mostly at bringing relevant laws in conformity with the Nigerian Government reforms and policies.

Capital Gains Tax Act

Disposal of Shares in Nigerian Companies: The Act has now introduced chargeable Capital Gains for any disposal by any person of Shares in any Nigerian registered Company. The following exceptions however apply:

1. where the proceeds from the disposal are reinvested within the same year of assessment in the acquisition of shares in the same or in another Nigerian company. Note however that any portion not reinvested shall be taxable;
2. where the disposal is less than N100 million in any 12 consecutive months. Where this happens, the person disposing the Shares will be required to render appropriate returns to the Federal Inland Revenue Service (FIRS); or
3. where the shares are transferred between an approved borrower and lender in a regulated Securities Lending Transaction as defined under the Companies Income Tax Act (CITA).

The rate of tax on disposal of shares is 10% payable in the case of individuals, in accordance with the provisions of Personal Income Tax Act while for a company, it is to be paid to the FIRS.

Companies Income Tax Act

• The determination of adjusted profit of related Companies: The Federal Inland Revenue Service Board is now responsible for determining the adjusted profit of related companies where it is of the opinion that the commercial/financial relations are fictitious or artificial for the purpose of taxation. This was previously the responsibility of the Federal Inland Revenue Service (FIRS) only and did not involve the Board.
• Exemption from taxation: All dividends received from investments in wholly export-oriented businesses are now exempted from taxation.
• The exemption on profits of exported goods whose proceeds are used to purchase raw materials, plant, equipment and spare parts have now been streamlined to Nigerian companies operating in any of the Nigerian Petroleum Sector. Prior to this Act, it related to any Nigerian company.
• FIRS power to charge tax on the turnover of non-Nigerian Information Technology (IT) Companies:  The Act now empowers the FIRS to assess and charge non-Nigerian IT companies to the extent of their economic significant presence in Nigeria for that year of assessment on such fair and reasonable percentage of that part of the turnover attributable to that presence. This includes e-commerce stores, online payment platforms, application stores, such as companies owned by Facebook, Twitter, Ali Express, YouTube, etc.
• Allowable deductions from profits of a company in a year of assessment: Qualifying capital expenditure incurred in generating the assessable profit are now to be allowed as deductions for the purpose of ascertaining taxable profits of a company. However, a company that enjoys pioneer status under the Industrial Development (Income Tax Relief) Act cannot benefit from this deduction. An asset partially utilized to generate assessable profit will qualify for a pro-rated capital allowance where the proportion of non-taxable income is above 20% of the company’s total income.
• Extension of the accounting period to which the reduction of minimum tax payable applies: The accounting period to which the reduction of minimum tax payable (0.25%) applies has now been extended to include any two accounting period as may be determined by the tax payer that falls between 1^st January 2019 – 31^st December 2021. This extension, however, seems to apply where a company has filed its relevant tax returns for any year of assessment falling on any date between 1^st January 2020 – 31^st December 2021 (inclusive of both dates).
• Exemption from Incentives for companies engaged in Downstream Gas Utilization. These companies are now exempt from benefitting from the 3-year tax-free period which is renewable for an additional two-year period for companies engaged in Downstream Gas Utilization:

1. Companies that have claimed the incentive previously;
2. A company that has claimed any other incentive for trade or business in gas utilization under any Nigerian law including the Petroleum Profit Tax Act or the Industrial Development (Income Tax Relief) Act; and
3. A new company formed from a company restructured through buy-back, reorganization etc. that had previously benefitted from the incentive.

• Penalty for late filing: Henceforth any company that claims the minimum tax payment relief and fails to file its returns with the FIRS as appropriate shall be liable to pay as penalty for late filing, an amount equal to the relief sought. The implication of this is that such a company will be deemed to forfeit the said relief.

• Payment of undisputed tax: Where tax assessed by the FIRS is in dispute, the taxpayer is required to pay only the disputed tax.
• Payment of tax in installments: Taxpayers making payment in installment are no longer mandated to obtain an approval from the FIRS to make such payments.

• Taxation of the recipient of a Unit Trust Payment: The tax due from the recipient of a Unit Trust payment is now subject to withholding tax. The implication is that the withholding tax would be final tax in respect of such payment.

• Refund of tax payment made in excess: Excess payment arising from compliance with deduction of tax from interest, rent, dividend and at source over the assessment made by the FIRS is now to be refunded within 90 days of the assessment if duly filed with the option to set off against future taxes.

• Taxable dividends in a Regulated Securities Lending Transaction (RSLT): The taxable dividends in a RSLT has been generalized to include compensating payments received by a lender from its approved agent or borrower. Previously, it only applied where the underlying transaction giving rise to the compensating payment is a receipt of dividends by a borrower on any shares or securities received from its approved agent or a lender.

Customs, Excise Tariffs, Etc. (Consolidation) Act

Excise duty on non-alcoholic, carbonated and sweetened beverages: The Act empowers the Nigerian Customs Service to impose and collect an excise of N10 per liter on non-alcoholic, carbonated and sweetened beverages.

Federal Inland Revenue Service (Establishment) Act

• Administrative penalty for failure: Failure by any taxpayer to give access to the FIRS after the 30 days’ notice or any extended time is liable to an administrative penalty of N25,000 for each day that it fails to grant access.

Personal Income Tax Act

• Deduction of premium: The Finance Act makes provision for the allowance of the deduction of the annual amount of premium paid by an individual for life insurance for his own life or that of his spouse. The premium allowed to be deducted is the amount of premium paid in the preceding year before the year of assessment of the individual.
• Increment and removal of distinction of penalty charges: Section 47 of the Personal Income Tax Act states the duty of a person engaging in banking to make disclosure upon a 7 days’ notice from a relevant tax authority not below the rank of a Senior Manager or Grade Level 14 or equivalent. The penalty charges for the contravention of section 47 of the Act has been increased to N1,000,000. This was previously N500,000 penalty in the case of a corporate body and N50,000 in the case of an individual. This distinction of penalty charges has now been removed.

Tertiary Education Trust Fund (Establishment, etc.) Act

Increment of tax rate: Except for small companies, the profits of companies registered in Nigeria is now subject to a 2.5% tax deduction which is an increment from the previous 2% payable.

Value Added Tax Act

• Tax registration by non-resident persons: A non-resident person who make taxable supplies to Nigeria is required to register for tax with FIRS and obtain a Tax Identification Number (TIN).
• Inclusion of VAT on invoices: A non-resident person is obligated to include value added tax (VAT) on its invoice for all taxable supplies.
• Withholding tax by taxable persons: Taxable persons to whom taxable supplies are made are required to withhold or collect the tax and remit it to the FIRS. Ordinarily, taxable persons to whom taxable supplies have been made are not required to withhold VAT unless the appointed representative of the FIRS has failed to collect the VAT.
• Appointment of representative by a non-resident person: A non-resident person that makes taxable supply to Nigeria may also appoint a representative for the purpose of complying with its tax obligations.

Conclusion

The Finance Act 2021 has made some significant changes to the Nigerian tax laws. It has introduced a tax on non-alcohol carbonated drinks, it has also introduced taxes on non-resident IT companies with significant presence in Nigeria. In addition, it has introduced the charging of VAT by non-resident foreign companies doing business in Nigeria. This is a key piece of legislation that would drive the Nigerian government’s fiscal policies in 2022 and it will be interesting to see how the collection of taxes on non-resident IT companies in Nigeria is to be policed.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact us.

The post Non-Resident Foreign Companies doing Business in Nigeria must now Register for VAT in Nigeria first appeared on Goldsmiths Solicitors.

The Companies and Allied Matters Act 2020 (CAMA) is the principal legislation that governs the registration of companies in Nigeria while the Corporate Affairs Commission (CAC) is the regulatory authority. Apart from the registration of the company, there are other regulatory requirements that must be met before any company can legally commence its business in Nigeria.

Registration with CAC

The process involved in the registration of a company in Nigeria are as follows:

1. Availability and Reservation of Proposed Name
2. Application and Registration
3. Approval

Availability and Reservation of Name

The first step is to conduct a name availability search with the CAC. The purpose of this is to ensure that the proposed name of the company is available for use and that there is no other company that has registered the same or similar name. Once the name is available, the CAC would issue a certificate of name reservation, which is usually valid for 60 days, enabling the registration to proceed to the next stage. It is always advisable to propose two names in case the first name is not approved.

Application and Registration

Following the reservation of the proposed name above, the next step would be to prepare all the necessary documents in support of the application. These includes the memorandum and articles of association of the proposed company. To this end, the promoters of the proposed company are required to provide the following information:

1. The type of company to be registered
2. Registered address of the company
3. The objects or nature of business of the company
4. Details of the company secretaries
5. Minimum issued share capital. (Please note that there is a minimum issued share capital requirement of N10,000,000 for companies with foreign participation. The minimum issued share capital could be more depending on the sector the company wishes to operate in).
6. Particulars of the proposed shareholders.
7. Particulars of the proposed directors.

Approval by CAC

Once the above information has been received and completed, they are submitted to the CAC for vetting. Payment of the filing fee is made and stamp duty is charged on the minimum issued share capital at the rate of 0.75%.  If satisfied, the CAC shall issue a certificate of incorporation evidencing that the company is now a legal entity authorized to commence business in Nigeria. Simultaneously, the Federal Inland Revenue Services (FIRS) would issue a Tax Identification Number (TIN) to the newly registered company. The TIN is a unique identifier that is linked to the company which enables it charge and remit the appropriate taxes to the FIRS.

Business Registration with Nigerian Investment Promotion Commission (NIPC)

Following the successful incorporation of the new entity with the CAC, there is a mandatory requirement for that entity to be registered with the NIPC before the company could legally commence any business in Nigeria. The NIPC has the primary responsibility to encourage, promote and cordinate investment in the Nigerian economy. The NIPC also has the responsibility of granting some incentives like pioneer status to any company which qualifies for such status.

The application to the NIPC involves filling the relevant application form, providing details of the shareholders and directors of the company and paying the appropriate official fee. If satisfied, the NIPC would issues a Certificate of Business Registration to the entity.

Business Permit, Expatriate Quota and Work Permit

In addition to the above, a wholly owned foreign company wishing to operate in Nigeria must obtain a business permit from the Nigerian Ministry of Interior and expatriate quotas if it wishes to employ foreigners in the country.  The expatriate quota is the precursor to the application for and issuance of work permit to the foreigner being employed by the company in Nigeria. Once approved, the expatriate is issued a Combined Expatriate Residence Permit and Aliens Card (CERPAC) which allows the employee to reside and work in Nigeria.

Certificate of Capital Importation

The company will need to obtain a Certificate of Capital Importation (CCI) from an authorised dealer, usually a local bank to serve as evidence of importation of capital which could be equity, debt, cash or goods into the country. The CCI also guarantees the unconditional repatriation of capital and profits out of the country.

Other Registrations/licensing Requirements

Depending on the sector of the Nigerian economy where the new company wishes to operate, it may be necessary to obtain registrations and/or licenses from some of the following (non-exhaustive) agencies:

• Central Bank of Nigeria (CBN)
• National Agency for Food and Drug Administration and Control (NAFDAC)
• Nigerian Electricity Regulatory Commission (NERC)
• Nigerian Communications Commission (NCC)
• Nigerian Civil Aviation Authority (NCAA)
• Nigerian Maritime Administration and Safety Agency (NIMASA)

Conclusion

Nigeria is a country of over 200 million people and operates a free market economy. There are no restrictions on foreigners wholly owning and operating companies in the country. The CAMA is the principal legislation that governs company registrations in the country and the CAC is the main regulatory body that oversees the registration of companies in Nigeria. The NIPC has the primary responsibility to encourage, promote and coordinate investment in the Nigerian economy. Any company wishing to employ expatriates in Nigeria must first obtain an expatriate quota for the relevant expatriate positions and then obtain work and residency permits.

There are other licensing and registration regimes, which depending on the sector the company wishes to operate in, it will also have to register with those agencies.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact us.

The post How a Foreigner can Register a Local Company in Nigeria first appeared on Goldsmiths Solicitors.