Starting a new business in Nigeria as a foreigner can be a daunting task, especially if you don’t reside there. However, this doesn’t imply that it’s an insurmountable process. To assist you in your journey, we have compiled a basic legal checklist that we believe will ensure a hassle-free launch of your business in Nigeria.
LEGAL CONSIDERATIONS FOR STARTING YOUR BUSINESS IN NIGERIA AS A FOREIGNER
1. The ideal entity type and requirements.
There are many types of business entities available for those who want to start a business in Nigeria. However, some of these entities may not be suitable for foreigners (individuals and companies) who wish to start their businesses in Nigeria. Moreover, some business activities are specific to certain types of entities.
In Nigeria, a Private Company Limited by Shares is generally the most suitable entity type for foreign-owned businesses. However, there may be specific situations where this type of entity is not the best option for your business goals. It is advisable to seek guidance from a Corporate or Business lawyer or law firm to get advice on the most appropriate entity type for your business.
Foreign companies may be exempt from registering their company if they meet the following criteria:
I. They are invited by any tier of government to work on specific individual projects;
ii. They are executing specific individual loan projects on behalf of a donor country or international organization;
iii. They are foreign government-owned companies that are solely engaged in export promotion activities; or
iv. They are engineering consultants or technical experts engaged in specialist projects with any tier of government.
2. Tax compliance and Reliefs (where applicable).
Once you have decided on the type of entity that would be ideal for your business, your next consideration should be to identify the tax obligations that come with running a business. All business entities, including foreign-owned ones, are required to obtain a Tax Identification Number and carry out VAT registration for subsequent tax filings.
According to Nigerian tax laws, it is expected that every manufacturer, wholesaler, importer, supplier, and distributor of taxable goods and services, known as taxable persons, register with the relevant tax authorities within six months of commencing their business.
It is considered an offense for an unregistered person to impose VAT on taxable goods and services. Therefore, it is essential to ensure your company is registered and compliant with tax regulations to avoid any legal consequences.
3. Bank account opening.
If you plan to start a business in Nigeria as a foreigner, it’s essential to have a local bank account to receive and withdraw funds. To open a corporate bank account for a foreign-owned company, you need to provide certain documents, including company registration papers, valid identification cards of company members, a SCUML certificate, and the BVN of members. If you intend to run your business remotely from outside Nigeria, you should confirm if you can create a bank account without being physically present in the country while still having control over your account.
4. Registration with the Nigerian Investment Promotion Commission (NIPC)
In Nigeria, all companies owned by foreigners must be registered with the NIPC. Registering with the NIPC provides legal recognition for such foreign-owned businesses and promotes accountability and transparency in business operations. Additionally, a company cannot obtain a business permit without first registering with the NIPC.
5. Obtaining a Business Permit.
All foreign-owned companies in Nigeria are required to obtain a business permit after registration. The business permit is what gives foreign-owned companies, the authority they need to carry out business operations within Nigeria lawfully.
6. Licensing requirements for your business sector where applicable
In Nigeria, some business sectors require a license or permit to operate, including Oil and Gas, Exports, Electricity, Telecommunication, Fintech, Banking and Finance, Maritime, and so on. It is important to verify whether your proposed business activities fall into any of these categories and require a license to operate within that particular sector.
7. Immigration
Are you planning to manage your business in Nigeria in person, or will you be operating it remotely? Will you be hiring foreign workers? Depending on your answers to these questions, you may need to obtain various immigration licenses and permits.
If you plan to reside in Nigeria while starting your business, you must obtain a Subject to Regularization Visa (STR Visa) upon entry into Nigeria. Subsequently, you will need to obtain a Combined Expatriate Residence Permit (CERPAC) card.
If your business intends to employ foreign nationals, an Expatriate Quota for its foreign employees will be required.
8. Procurement of Certificate of Capital Importation (CCI)
Foreigners who want to establish a business in Nigeria and import capital for that purpose must obtain a Certificate of Capital Importation. Capital could refer to raw materials, foreign currency, machinery, and other relevant items.
The advantage of obtaining a CCI is that it allows foreign investors to transfer capital, profits, and dividends to their home country at official foreign exchange rates.
9. Intellectual Property Protection
If a foreign individual or organization owns a business or brand in a country outside of Nigeria and wants to expand it to the Nigerian market, they should consider protecting the existing brand identity within Nigeria. This is because Intellectual Property protection is specific to a territory. Even if the company’s intellectual property is registered in another country, it doesn’t automatically give the company Intellectual Property protection rights within Nigeria. To enjoy such rights within the country, the business needs to carry out intellectual property registrations in Nigeria.
CONCLUSION
Just registering your company in Nigeria isn’t enough to conduct legitimate business operations. There are several considerations to be made as a foreigner who wants to start a business in Nigeria. We have listed some of them above, but we understand that every client’s needs are unique. Therefore, it’s recommended to seek professional guidance in this regard.
If this is what you want, our legal team will be happy to get on a call with you to provide market entry strategies specific to your business goals. On the other hand, if you need a professional to assist you in complying with all the requirements needed for you or your organization to start a business in Nigeria lawfully, we will be happy to assist you in this regard as well.
Are you ready to start your business in Nigeria legally without any hitches? Feel free to reach out to us HERE or through the Whatsapp icon on the lower right part of this page and we’ll respond to you.
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