Guide To Doing Business In Nigeria – Corporate/Commercial Law

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There are several applicable rules and regulations of doing
business in Nigeria. This purpose of this write-up is aimed at
summarizing the steps required to carry out business in Nigeria and
the rule and regulations governing businesses in Nigeria.

Business setup and operation in Nigeria are governed by various
laws. These laws include but are not limited to:

  • The Companies and Allied Matters Act
    (CAMA) (This is the primary law that governs companies’
    formation and maintenance in Nigeria)

  • Companies Income Tax Act

  • Value Added Tax Act

  • Withholding tax Act

  • Nigerian Investment Promotion
    Commission Act

  • Labour Act

  • Immigration Act

  • Immigration Regulations 2017

  • Employee Compensation Act

  • Banks and other Financial
    Institutions Act


A company registration is the first important step required for
doing business in Nigeria. Under the Nigerian law (CAMA), only a
company duly registered in Nigeria can engage in any business
within Nigeria.

The government agency in charge of the company formation is the
Corporate Affairs Commission (CAC).

The first step towards a business registration is to conduct a
search for the intended name of the business in order to have the
name reserved. The applicant will submit two intended names for
registration. CAC will, in turn, use the names provided to search
through its database in order to make sure that the name is not
already in use by another business or that the name is not similar
to any other business name.

It is worthy of note to state that any individual or corporate
entity, either resident or non-resident in Nigeria can be a member
of a company.

Furthermore, a minimum of two persons or entities are required
to form a company any company in Nigeria and a minimum of two
individuals are required to be first directors of a company.


Some of the applicable taxes for a company operating in Nigeria
include the followings:

Company Income Tax: This is the tax is levied
on the income of the business. Company income tax is charged at 30%
of the profit earned by the company after all allowable deductions
for a company with more than N100 Million Naira annual turnover.
The tax is charged at 20% for a company with a turnover between N25
Million and N100 Million.

Value Added Tax (VAT): It is payable by the
customer and is imposed on the supply of goods and services. The
VAT is currently charged at 7.5%.

Stamp Duties: This is a tax payable on
instruments. The rate of this tax is dependent on the document and
the value of the transaction on the face of it. It is usually
charged at a fixed rate and ad valorem.

Capital Gains Tax: This is 10% tax imposed on
capital arising from sales, exchange or any other dispositions of
properties. It is charged to the chargeable assets of a business.
It is triggered when an asset is sold.

Withholding Tax: The withholding tax is usually
charged at the rate of 10% to 5% of the payable sum, depending on
the type of payments. The withholding tax is normally deducted at
source when payment is to be made to the beneficiary. It is an
advance payment of income tax.

Industrial Training Fund: The tax is charged at
1% of the company employees’ payroll. It is only applicable to
a company with a minimum of 50 Million Naira turnover or having
more than 5 employees.

National Social Insurance Trust Fund (NSITF):
The NSITF is also charged at the rate of 1% of the company
employees’ payroll. The NSITF payment is not actually a tax,
but a form of mandatory insurance for the employees of all
companies operating in Nigeria.

Education Tax Fund: This tax is applicable to
all companies operating in Nigeria. It is levied at 2% on the
profits of companies operating in Nigeria.

Petroleum Profits Tax: This tax is applicable
to only companies engaging in the exploration and production of
crude oil. It is charged at the rate between 50% to 85% of
ascertained profits after deductions of all operational

The duty of collecting tax is vested in the 3 arms of
government. The Federal Inland Revenue Service (FIRS) is the body
in charge of the taxes payable to the Federal Government. The taxes
payable to the state government is paid to the State Boards of
Internal Revenue (SNIR). The Local Government also administers some
levies, which they collect through across various councils within


According to CAMA, every company is expected to appoint an
auditor or auditors at its annual general meeting to audit the
financial statements of the company. The first auditors of a
company may be appointed by the directors at any time before the
company is entitled to commence business and auditors so appointed
shall hold office until the conclusion of the next annual general

The appointment of subsequent auditors is done by the passing a
resolution. The auditors hold office for one year as CAMA provides
that the appointment of auditors is done at every annual general
meeting. However, a retiring auditor can be reappointed to continue
in the role as the auditor to the company.

Where at an annual general meeting there is no appointment or
reappointment of an auditor then the directors of the company may
appoint someone to fill the vacancy. Where the directors exercise
this power, then the company is entitled to give notice to the
Corporate Affairs Commission (CAC) within one week of the power
becoming exercisable.


The Nigerian Investment Promotion Commission (NIPC) is the body
in charge of promoting, coordinating and monitoring investments in
Nigeria. This body is established by the Nigerian Investment
Promotion Commission Act. The functions to the commission

  • bethe agency of the Federal
    Government to co-ordinate and monitor all investment promotion
    activities to which this Act applies;

  • initiateand support measures which
    shall enhance the investment climate in Nigeria for both Nigerian
    and non-Nigerian investors;

  • promoteinvestments in and outside
    Nigeria through effective promotional means;

  • collect, collate, analyse and
    disseminate information about investment opportunities and sources
    of investment capital

  • registerand keep records of all
    enterprises to which this Act applies;

  • identifyspecific projects and invite
    interested investors for participation in those projects;

  • initiate, organize and participate in
    promotional activities, such as exhibitions, conferences and
    seminars for the stimulation of investments;

  • provideand disseminate up-to-date
    information on incentives available to investors;

  • assistincoming and existing investors
    by providing support services;

  • evaluate the impact of the Commission
    on investments in Nigeria and make appropriate recommendations

  • Advise the Federal Government on
    policy matters, including fiscal measures designed to promote the
    industrialisation of Nigeria or the general development of the

The major advantage of NIPC registration is that the agency
process application for tax incentives known as pioneer status for
deserving companies.


The contracts between employer and employee are usually guided
by the Labour Act.

Section 7(1) of the Labour Act requires employers to provide a
contract to employees within three months of commencement of the
employment relationship. The contract of employment is meant to

  • The names of both the employer and
    the employee

  • The name and address of the employee,
    the nature of the employment

  • If the contract is for a fixed term
    it should also contain the term or date in which it expires,

  • The wages to be paid to the employee
    should also be contained in the contract of employment, the terms
    and conditions relation to hours of work, holidays etc.

Either party to a contract of employment may terminate the
contract on the expiration of a notice given by him to the other
party of his intention to do so. The notice to be given is
calculated as follows;

  • one day, where the contract has
    continued for a period of three months or less;

  • one week, where the contract has
    continued for more than three months but less than two years;

  • two weeks, where the contract has
    continued for a period of two years but less than five years;

  • one month, where the contract has
    continued for five years or more.

The National Industrial Court is the court which is vested with
the jurisdiction to handle employment matters in Nigeria in case of
any disputes.


A business permit is a document that allows a wholly owned
foreign company to operate a business in Nigeria. It is usually
issued by the Federal Ministry of Interior on behalf of the Federal
Government of Nigeria..

The requirements for obtaining a business permit in Nigeria
include the following:

  • The incorporation documents of the
    applicant’s company

  • Tax Clearance Certificate

  • Joint venture agreement

  • Approval from all appropriate
    professional bodies. This approval depends on the type of business
    being carried out by the company.

In practice, a business permit is usually applied for alongside
an expatriate quota. An expatriate quota in Nigeria is the approval
granted by the Minister of Interior to foreign or indigenous
companies to enable foreign employees, directors or owners of
businesses work in Nigeria. As part of regulatory requirements, a
foreign-owned company registered in Nigeria must obtain Business
Permit and Expatriate Quota from the Minister of Interior.

Applicants can apply for as many quotas depending on the slots
required. The requirements for the grant of an expatriate quota
include the following:

  • Duly completed registration form

  • Incorporation documents to include a
    memorandum, articles of association, the share capital and the
    particulars of directors of the company.

  • Feasibility report to be registered
    with CAC.

  • Certified current audited account and
    bank reference letter

  • Annual income tax clearance
    certificate of each expatriate staff

  • Proposed annual salary to be paid to
    the expatriate worker indicating their designation, names, and
    duration of employment

  • Joint Venture Agreement (JVA) for
    partnership ventures between Nigerians and foreigners

  • Company’s Tax Clearance

  • Lease agreement or C of O for
    operating premises

  • Particulars of training programs for

  • List of Nigerians working in the
    company to understudy the expatriates

  • License permit from government
    agencies where company engage in specialized sectors such as the
    oil and gas sector, telecommunications, health, etc.

  • Certificate of capital importation
    where Applicant wants to import capital into the country

  • Business permit


The CERPAC is the acronym for Combined Expatriate Residence
Permit and Aliens Card. The Nigeria Immigration Service requires
foreigners living in Nigeria to get the CERPAC or they will be
considered to be illegal residents and subject to repatriation from
Nigeria. This card is meant to be obtained by expatriates working
in Nigeria. The validity of CERPAC istwo years, after which
application for revalidation must be made.

The current official fee of CERPAC is $2,000

The requirements for obtaining CERPAC includes the

  • Expatriate quota approval

  • International passport with STR visa

  • A duly completed CERPAC statutory

  • Company’s board of directors’
    resolution confirming the appointment as director (where

  • Application letter from the employer
    requesting Regularization of stay and accepting Immigration
    Responsibility (IR) on behalf of the expatriate.

  • Letter of Appointment/Employment

  • Acceptance of the offer of

  • Vetted Credentials

  • Payment of prescribed fees


There are various business licenses applicable to the various
sectors of economy in Nigeria that are specially regulated. A
business license or approval must not be confused with a Business
Permit issued by the Ministry of Interiors.

The requirement of a business permit depends on a specific
business sector or requirements. Some of the common business
licenses would be discussed below


The National Agency for Food and Drug Administration and Control
(NAFDAC) was officially established in October 1992. The National
Agency for Food and Drug Administration and Control Act Cap N1 Laws
of the Federation of Nigeria (LFN) 2004 mandates the Agency to
regulate and control the manufacture, importation, exportation,
distribution, advertisement, sale and use of Food, Drugs,
Cosmetics, Medical Devices, Packaged Water, Chemicals and
Detergents (collectively known as regulated products). NAFDAC
permits cover foods and drugs, so if a manufacturer produces any
products that fall within these categories, then the product will
need to be registered with NAFDAC.

If your company produces different products you will need to
register each of them separately. For instance, if you own a
company that produces Juice and Plantain chips you will need
different NAFDAC registration numbers for each of the product.

The failure to obtain a NAFDAC approval or registration before
distributing any drugs or processed food or food materials may lead
to a complete seizure of such products by the government.


The Department of Petroleum Resource (DPR) is a department under
the Nigerian Federal Ministry of Petroleum Resources (FMPR). It is
saddled with the responsibility of exploration and importation of
Petroleum products. It also oversees the safety and other
regulations that relate to the exportation and importation of the
products into the country. As part of its activities, the
department manages the upstream and downstream in the Nigeria
petroleum industry.

The DPR Permit is the license required to operate a company or
facility that has to do with the Oil and Gas industry in Nigeria.
The DPR is the sole body responsible to formulate Regulations and
Guidelines for Oil and Gas Industry activities in Nigeria.

There are 3 categories of permits granted by the DPR for oil
& gas servicing companies, which are:

  1. The General Purpose: this covers
    works that do not require specialized or certified

  2. Major Category: Here, applicants are
    required to possess relevant and verifiable technical/special

  3. The specialized category: In this
    category, applicants are required to possess relevant and
    verifiable technical/special skills with different job categories
    like Offshore Pipeline laying and construction, Onshore Pipeline
    laying and construction and many others.

The companies seeking to engage in oil exploration and
production must obtain licenses such as Oil Exploration License and
Oil Mining Lease.

The companies engaging in downstream sectors, especially filling
station or gas plant also require separate licenses to carry out
their operations.


By the provisions of the Minerals and Mining Regulation 2011, a
company who is qualified may submit an application for an
exploration license. A mining lease has a duration of 25 years and
can be renewed. The grant of Mining Lease is coordinated by the
Federal Ministry of Mines and Steel Development (MMSD) under the
Mining Cadastre Office approving same. It is also very instructive
to note that applications for a mining lease in Nigeria must
strictly comply and conform to requirements and procedures under
the laws that regulate the sector, which include the Nigerian
Minerals and Mining Act, 2007 and the Minerals and Mining
Regulation 2011.


The regulatory agency in charge of licensing financial
institutions and payment gateways or processors such as money
transfers or FINTECH companies is the Central Bank of Nigeria

The Central Bank also licenses both international, national
& regional banks operating in Nigeria. The CBN also responsible
for licensing of small scale financial institutions such as the
Microfinance Bank, Mortgage Banks among few others.


Money Lending License
is a license which is granted to
individuals or corporate bodies who intend to go into the business
of lending money. For an individual or a company to become a
legitimate money lender then the individual or company must first
apply to get a money lenders license.

In Lagos State, Nigeria, the first step is to make a formal
application to the chief magistrate within the magisterial
jurisdiction where the business will be carried out. After this is
obtained from the court, the applicant is to make a formal
application to the Ministry of Home Affairs and Tourism with the
relevant documents. And lastly, a visitation and physical
inspection will be carried out in the company.


A company seeking to engage in export must also obtain an Export
License from the Nigerian Export Promotion Council.

However, there are other licenses applicable to various sectors
of economy as stated above.


Opening of a bank account is very crucial to business operation.
The Nigerian bank accounts can be opened in Naira, Dollars, Euro or
Great British Pounds (GBP). Having a bank account enables companies
to easily run its businesses. It also enables foreign investors to
obtain the Certificate of Capital Importation.

The procedure for opening a business account include:

  1. Select a bank

  2. Fill out the application form and
    attach required documents such as passport, means of identification

  3. Provide the bank with your business
    license and business registration documents

  4. Provide the bank with Tax
    Identification Number (TIN).

  5. Also obtain the Biometric
    Verification Number (BVN)


Certain businesses are required to register with the Special
Control Unit Against Money Laundering (SCUML). The business
industries that are liable to register with the SCUML includes
mining, real estate and few others.

These types of businesses are classified as Designated
Non-Financial Institutions (DNFI). They must register and render a
monthly report to SCUML in accordance with the provisions of the
Money Laundering (Prohibition) Act 2011.


The procedure for doing business in Nigeria must commence with
the business registration with the Corporate Affairs Commission.
Upon the business registration, a company is expected to obtain the
Tax Identification Number (TIN), which is a mandatory requirement
for a bank account opening by all registered company in

A registered company may also be required to obtain certain
licenses applicable in various sectors of the economy. For
instance, any company seeking to engage in oil and gas operation
must be duly licensed by the Department of Petroleum Resources.

For a registered company to be in good standing and operate
without hiccups, it must comply with all other statutory
requirements governing business operations in Nigeria, especially
the tax statutes.

Originally published 27 July, 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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