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Nigeria
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Nigeria with efficiency and assurance.
WHY NIGERIA?
Nigeria, officially the Federal Republic of Nigeria, is a country in West Africa between the Sahel to the north and the Gulf of Guinea in the Atlantic Ocean to the south. It covers an area of 923,769 square kilometres (356,669 mi2). With a population of more than 236 million, it is the most populous country in Africa, and the world’s sixth-most populous country. Nigeria borders Niger in the north, Chad in the northeast, Cameroon in the east, and Benin in the west. Nigeria is a federal republic comprising 36 states and the Federal Capital Territory, where its capital, Abuja, is located. The largest city in Nigeria by population is Lagos, one of the largest metropolitan areas in the world and the largest in Africa.
The Nigerian economy became the largest African economy following the 2013 GDP rebasing exercise. The petroleum sector alone accounts for over 90% of the country’s total export earnings. According to the US Energy Information Administration, Nigeria is the thirteenth largest producer of crude oil with 2.4million bbl/ day in 2013 and has the 2nd largest crude oil reserves in Africa with 37.2 billion barrels and natural gas reserves of 5.12 billion cubic metres contributing 2.98% of the world total according to OPEC statistics. Nigeria has large deposits of iron ore, tin, columbite, coal, niobium, lead, zinc, bauxite, etc. There is also a huge service sector supporting the oil and gas value chain and a significant market and population for goods and services. Nigeria has Africa’s largest economy, with a GDP of $477.38 billion in 2023. Nigeria is a big oil producer with a population of more than 225 million people. The country recently made amendments to local company and tax laws in order to create a more enabling business environment for local and foreign business owners including ratifying the African Continental Free Trade Area (AfCFTA) Agreement. The relatively recent development is aimed at positioning the country better to attract foreign investments and establishes profitable business presence for foreign investors in Nigeria. Under Nigerian law, foreigners can own a new company 100%. The first stage to foreign participation or ownership of a company in Nigeria is to establish the partners/shareholders and their respective percentage shareholdings in the proposed company. Thereafter, the promoters of the company would establish the name of the proposed company, initial authorized share capital and main objects of the proposed company. Except in instances where the proposed company will be 100% owned by non-resident shareholders, the promoters should prepare Joint-Venture Agreement between prospective shareholders. The Joint-Venture may specify; inter-alia, mode of subscription by parties, manner of Board Composition, mutually protective quorum for meetings, specific actions which would necessitate share-holders approval by special or other resolutions.
ADVANTAGES
Market & Economy
- Largest Market: Africa’s biggest population and economy, offering a vast customer base.
- Economic Growth: Projected to become a top 20 global economy by 2030, with expanding industries.
- High ROI: Strong potential for significant returns, especially in sectors like tech and essential goods.
Resources & Workforce
- Natural Resources: Rich in oil, gas, fertile land, and various solid minerals.
- Young & Dynamic Workforce: A large, energetic, and increasingly educated youth population.
- Abundant Opportunities: Societal challenges (food, housing, tech) translate into business needs and opportunities.
Government & Policy
- Incentives: Tax holidays, free trade zones (FTZs), and support for investors.
- Strategic Zones: FTZs offer streamlined processes, tax exemptions, and easier market access.
- Digital Economy: Initiatives like Itana aim to facilitate online business setup.
Strategic Positioning & Innovation
- Gateway to Africa: Strategic location for accessing West African markets.
- Tech Hub: A fast-growing technology and innovation ecosystem, especially in Lagos.
TAX REGIME
Personal Income Tax (PIT)
The new regime features more progressive bands and provides relief for low-income earners:
- Tax-Free Threshold: Individuals earning ₦800,000 or less annually are fully exempt from income tax.
- Progressive Rates: Tax rates for higher earners range from 0% to 25%.
- Abolition of CRA: The Consolidated Relief Allowance (CRA) has been replaced by a specific Rent Relief system (20% of annual rent, capped at ₦500,000).
- Worldwide Income: Nigerian residents are now explicitly taxed on their worldwide income, while non-residents are taxed only on Nigeria-sourced income.
Corporate and Business Taxation
- Small Company Relief: Businesses with an annual turnover of ₦50 million or less (and fixed assets ≤ ₦250 million) are exempt from Corporate Income Tax (CIT), Capital Gains Tax (CGT), and the Development Levy.
- Development Levy: A unified 4% levy on assessable profits replaces multiple separate charges like the Tertiary Education Tax and Police Trust Fund levy.
- Global Minimum Tax: Multinational groups with a global turnover exceeding €750 million are subject to a 15% minimum effective tax rate (ETR).
- Capital Gains Tax (CGT): The CGT rate for companies has increased from 10% to 30%, aligning it with the standard CIT rate.
Value Added Tax (VAT)
- Rate: Remains at 7.5%.
- Expanded Exemptions: A broader list of essential goods and services is now zero-rated, including basic foods, medical products, and electricity.
- Input VAT Recovery: Businesses can now claim input VAT on both services and capital assets, which was previously restricted.
NIGERIA COMPANIES
Business Name (Enterprise/Sole Proprietorship)
- For individuals or small partnerships.
- Simple registration, suitable for small-scale businesses.
Companies Limited by Shares (Most Common)
- Private Limited Company (Ltd.): Most popular for profit-making; members’ liability is limited to shares; single person can form it; restricted share transfer.
- Public Limited Company (PLC): Can offer shares to the public; unrestricted share transfer.
Company Limited by Guarantee (Ltd./Gte.)
- For non-profits (charity, arts, science, etc.) where profits are reinvested, not distributed to members.
Unlimited Company (ULtd.)
- Members have unlimited personal liability for the company’s debts (rare).
Partnerships
- General Partnership: Two or more people sharing profits and losses.
- Limited Partnership (LP): Has general partners (unlimited liability) and limited partners (liability limited to contribution).
- Limited Liability Partnership (LLP): Offers limited liability to all partners (mainly in Lagos State).
Incorporated Trustees (IT)
- For non-governmental organizations (NGOs), religious bodies, social clubs, etc.
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Contact Us
Get in touch with the right people to get the right help in setting up your business in Nigeria.
enquiries@chandrawatpartners.com.