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, other are limited to some specific sectors. The nature and application of these incentives have been considerably simplified.
The incentives include:
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 percent.
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 2 years where merited) or 7 years in respect of industries located in economically disadvantaged local government area of the Federation. At the moment, there is a list of 71 approved industries declared pioneer industries, which can benefit from tax holiday.
To qualify, a joint venture company or a wholly foreign-owned company must have incurred a capital expenditure of not less than five million Naira whilst that of qualified indigenous company should not be less than N150,000.00. In addition, an application in respect of Pioneer Status must be submitted within one year the applicant company starts commercial production otherwise the application will be time-barred.
Notes on the Pioneer Status Incentive:
Procedure for NIPC Business Registration
The Nigerian Investment Promotion Commission (NIPC) Act 16 of 1995 established the Nigerian Investment Promotion Commission established by law to encourage, promote, and coordinate all investments in Nigeria. This act also regulates the participation of foreign businesses in the country.
The NIPC Act allows foreign nationals to own up to 100% equity and invest in any business in Nigeria except those indicated on the negative list as defined by section 31 of the Act such as production of arms, ammunition, narcotics and related substances.
Section 20 of the NIPC Act requires all enterprises in which foreign participation is permitted to apply to the Commission for business registration.
Procedure For Processing
The NIPC Business Registration takes 24 hours to process once all required documents are submitted.
Applicant downloads NIPC Form 1 from the website at https://www.nipc.gov.ng;
Applicant pays a non-refundable processing fee of N15,000.00 only, via Remita online portal at www.remita.net;
Applicant submits all required documents (see 1.4 above) at the One Stop Investment Centre in NIPC or scanned copies sent to email@example.com;
NIPC Business Registration Certificate issued to applicant.
Capital importation and remittances -To fund their investments in Nigeria, foreigners are free, subject to money laundering restrictions, to bring in any recognised foreign currency into Nigeria. Such funds will have to be brought in through an authorised dealer (usually a bank authorised by the CBN). 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. However, it could if it has access to independent sources of foreign currency (as would a borrower that generates foreign currency through exports) lawfully make such interest and principal payments from its own resources.
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).
Capital Importation Certificate is aimed at providing customers with statutory evidence of capital inflow/investment into a Nigerian company. It legitimizes and facilitates the repatriation of dividends and capital to foreign investor.
CCI’s are Central Bank of Nigeria (CBN) certificates issued by banks for the importation of cash (foreign currency Inflow) for investment as Equity or Loan, and also for the importation of machinery and equipment for investment as Equity or Loan. Click on the links below to view the documentary requirements for the issuance of a Capital Importation Certificate (CCI):
Documents required to issue CCI for Importation of cash as Equity Investment.
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