Nigeria

By Olawunmi Ojo Introduction: Profitability Is Not Enough, Repatriation Is Key For many foreign investors entering Nigeria’s fast-growing markets, profitability is only half the battle. The real challenge lies in how much of those profits can be legally repatriated and how much will be eroded by taxes, regulatory delays, or foreign exchange restrictions. This article outlines the tax regimes highlighting the new 2025 tax reforms, planning strategies, and repatriation channels that foreign-owned businesses and foreign investments in Nigeria should understand from day one. Understanding Nigeria’s Corporate Tax Framework Nigeria operates a multi-layered corporate tax system governed by the Companies Income Tax Act (CITA), the Finance Acts (which amend tax laws annually), and regulations issued by the Federal Inland Revenue Service (FIRS). As of the latest update under the Finance Act 2024, the current corporate income tax regime is as follows: 0% for small companies with an annual turnover of ₦25 million or less. 20% for medium-sized companies with a turnover between ₦25 million and ₦100 million. (Small companies (turnover below NGN 100 million, fixed assets less than NGN 250 million) are now fully exempt from CIT, CGT, and the new Development Levy. 30% for large companies with turnover above ₦100 million. (Recent reforms aim to reduce the standard CIT rate to 5% by 2026 and 25% by 2027 for large companies. Tertiary Education Tax (TET):5% of assessable profit. National Information Technology Development Agency (NITDA) Levy: 1% for companies in specific sectors like telecoms, banking, and ICT. Capital Gains Tax: Increase from 10% to 30% for companies, aligning with CIT Withholding Tax (WHT): 10% on dividends, interests, royalties, and rent (5% for individuals/local entities). Reduced rates under double tax treaties (DTTs) may apply. Minimum Effective Tax Rate (ETR) Multinational companies (turnover greater than NGN 50 billion or group turnover greater than EUR 750 million) must ensure a 15% ETR, with a “top-up” tax to meet the threshold Investors must also register for Value Added Tax (VAT), which is currently at 7.5%, and ensure compliance with Transfer Pricing Regulations for related-party transactions. Tax Planning for Foreign Investors Foreign investors can legally optimize their tax obligations in Nigeria through: Tax Incentives & Reliefs: Pioneer Status Incentive (PSI): Offers a 3 to 5-year tax holiday for companies in eligible sectors. Export Expansion Grant (EEG): Incentive for exporters through tax credits. Free Trade Zones (FTZs): Companies operating in FTZs enjoy 100% tax exemptions and unrestricted capital repatriation. Double Tax Treaties (DTTs): Nigeria has treaties with countries like the UK, China, South Africa, etc., reducing withholding tax rates and preventing double taxation. Group Structuring: Holding companies in tax-efficient jurisdictions like Mauritius or the Netherlands can help manage tax exposure. Structuring with Special Purpose Vehicles (SPVs) for capital raising, project finance, or asset protection. Strategic Use of Transfer Pricing: Ensure all intercompany transactions are conducted at arm’s length. Prepare and maintain appropriate documentation to avoid penalties. Capital Allowances & Investment Deductions: Leverage accelerated depreciation on qualifying capital expenditure to reduce taxable income. How Foreign Investors Can Legally Repatriate Their Profits Out of Nigeria Foreign investors in Nigeria are permitted to repatriate capital, dividends, interest, and profits through legitimate channels, provided they comply with the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act and Central Bank of Nigeria (CBN) regulations. Key Repatriation Channels and Requirements: Certificate of Capital Importation (CCI): Issued by Nigerian banks on behalf of the CBN within 24–48 hours of capital inflow. It is the primary evidence that funds were imported through official channels and is mandatory for repatriation of proceeds. Dividend and Profit Repatriation: Profits, dividends, and interest earned can be repatriated net of applicable taxes (WHT and corporate tax). Dividends attract a 10% withholding tax (or a lower rate under DTTs). Sale or Liquidation Proceeds: In the event of divestment or liquidation, the proceeds (capital and gains) may be repatriated upon presentation of the CCI and tax clearance. Loan Repayments and Interest: Foreign loans must be registered with the CBN via Form M and be backed by proper agreements. Interest payments can be repatriated, subject to applicable WHT (usually 10%). Use of Authorized Dealers: All remittances must be processed through licensed banks (authorized dealers) and must comply with anti-money laundering and tax compliance documentation. Investment via Free Zones: Businesses operating in Free Zones enjoy unrestricted repatriation without FX restrictions. Common Pitfalls to Avoid Failure to Obtain CCI: Without a CCI, capital and returns may be trapped or face regulatory delays. Non-compliance with Transfer Pricing: Can lead to audits, penalties, and disallowance of intercompany expenses. Inadequate Tax Planning: May lead to higher tax exposure and repatriation delays. Misalignment with BOFIA and SEC Regulations: Especially for financial and capital market investments. FAQs: Tax and Repatriation in Nigeria Q1: Can foreign investors repatriate 100% of their profits from Nigeria? A: Yes, provided they obtained a Certificate of Capital Importation (CCI) and have fulfilled all tax obligations, including withholding and corporate income taxes. Q2: What happens if I didn’t get a CCI? A: Repatriation becomes difficult or impossible. A CCI is a precondition for legal remittance of funds abroad. Q3: What are the new tax updates in the Finance Act 2023? A: Key updates include increased tertiary education tax from 2% to 2.5%, clarification on digital service taxes, and tax reliefs for startups and MSMEs. Q4: Are there sectors where tax holidays apply? A: Yes, under the Pioneer Status Incentive, eligible sectors such as manufacturing, agro-processing, ICT, and infrastructure may enjoy 3 to 5 years of tax holidays. Q5: Are capital gains from foreign investors taxed when exiting investments? A: Yes, capital gains tax at 10% applies unless exemptions under restructuring provisions or tax treaties apply. Q6: How long does it take to repatriate profits? A: Typically 1–2 weeks, depending on documentation completeness and bank processing times. Q7: Can I repatriate in foreign currency? A: Yes. CBN allows repatriation in the currency of the original investment, often USD, EUR, or GBP. Conclusion: Plan Repatriation Now to Keep Your Profits Tax and repatriation planning can't be an afterthought—you need to build it into your investment structure. With Nigeria’s reforms coming into effect by January 2026, preparation today is essential for tomorrow’s success. At The Trusted Advisors, we specialise in tax structuring, repatriation strategy, and cross-border investment planning to protect your returns and secure your investment. Ready to map out your repatriation plan? Let’s get started. Contact Olawunmi Ojo: [email protected] Tel: +2348038954988

Written by Olawunmi Ojo Introduction Nigeria, often referred to as Africa’s largest economy and most populous nation, presents immense opportunities for tech startups looking to expand into West Africa. With a fast-growing digital population, youthful demographics, and a burgeoning startup ecosystem, the country continues to attract foreign investors and technology entrepreneurs. However, succeeding in this promising yet complex market requires a well-informed understanding of the legal and regulatory landscape. Why Nigeria? Before diving into the legalities, it’s essential to understand why global investors are paying close attention to Nigeria: Large Market Size: Over 200 million people, with a growing middle class and increasing urbanization. Vibrant Startup Ecosystem: Nigeria’s startup scene, especially in fintech, healthtech, edtech, and logistics, continues to attract multi-million-dollar funding rounds. Policy Reforms: Pro-investment reforms, such as the Companies and Allied Matters Act (CAMA 2020), Finance Act amendments, and startup legislation, have improved the regulatory environment. Strategic Location: As a West African hub, Nigeria offers a launchpad for regional expansion. This guide provides a clear, practical roadmap for foreign tech startups seeking to establish a compliant and successful presence in Nigeria. It outlines key legal considerations, regulatory obligations, and strategic actions necessary to navigate the Nigerian tech ecosystem. Understanding Nigeria’s Corporate Legal Framework Before launching operations, it is essential for startups to understand the corporate laws governing business entities in Nigeria. The Companies and Allied Matters Act, 2020 (CAMA 2020) is the primary legislation that regulates business formation and corporate governance in the country. Startups looking to set up in Nigeria typically register as: Private Companies Limited by Shares (Ltd) – the most common and preferred structure for tech startups due to its flexibility. Public Companies (PLC) – ideal for scaling enterprises with intentions of raising capital from the public or listing on a stock exchange. Incorporated Trustees or NGOs – suitable for non-profit ventures, research-focused initiatives, or social impact-driven enterprises. The Corporate Affairs Commission (CAC) is the regulatory body responsible for company registration and compliance. Key requirements include: At least one shareholder and one director (they may be the same person) A registered business address in Nigeria Minimum share capital of ₦100,000 for local entities and N100,000,000 for wholly foreign owned entities (although many tech startups register with higher capital for credibility and investment purposes) Appointment of a company secretary (mandatory for public companies) Business Permits and Sector-Specific Licences Depending on your startup’s area of focus whether fintech, healthtech, agritech, or e-commerce you may be required to obtain sector-specific licenses. For example: Fintech startups offering payment solutions must obtain approval from the Central Bank of Nigeria (CBN), including Payment Service Provider (PSP) or Switching licenses. Healthtech startups must comply with regulations from the National Health Insurance Authority (NHIA) and the Medical and Dental Council of Nigeria (MDCN). E-commerce startups may need to adhere to consumer protection regulations issued by the Federal Competition and Consumer Protection Commission (FCCPC). In addition to sector-based permits, foreign-owned entities must also obtain: Business Permit – authorizing the employment of foreign nationals Intellectual Property Protection Safeguarding your brand, technology, and innovations is critical. Nigeria operates a "first-to-file" system, making it essential to register your IP rights as early as possible. Key registrations include: Trademarks – under the Trademarks Act Patents and Industrial Designs – via the Patents and Designs Act Copyrights – governed by the Nigerian Copyright Act (recently amended in 2023) These rights are administered by the Trademarks, Patents and Designs Registry (Federal Ministry of Industry, Trade and Investment) and the Nigerian Copyright Commission Data Privacy and Cybersecurity With the rise of digital services, data privacy is a crucial compliance area. Startups handling user data must comply with the Nigeria Data Protection Regulation (NDPR) issued by the National Information Technology Development Agency (NITDA). Startups are required to: Conduct regular data audits Obtain user consent before collecting data Appoint a Data Protection Officer (DPO) if handling large-scale data File compliance reports with NITDA Non-compliance could lead to penalties of up to 2% of annual gross revenue, especially for companies with a large user base. Taxation and Incentives Startups operating in Nigeria must register with the Federal Inland Revenue Service (FIRS) for tax purposes. The key taxes applicable include: Company Income Tax (CIT): 30% for large companies; 20% for medium companies (annual turnover between ₦25 million and ₦100 million); startups with a turnover below ₦25 million are exempt. Value Added Tax (VAT): 7.5% Withholding Tax (WHT): typically 5% to 10% depending on the transaction Personal Income Tax (PIT): for employees, based on a progressive scale up to 24% Under Nigeria’s new Finance Act (2024), additional digital tax provisions have been introduced, including the taxation of non-resident digital service providers. Startups offering digital services from offshore locations should assess their tax exposure and compliance obligations carefully. Nigeria also offers incentives for pioneer tech companies under the Pioneer Status Incentive Scheme, which may include up to 3- to 5-year tax holidays. Foreign Exchange and Capital Repatriation The Central Bank of Nigeria (CBN) regulates the inflow and outflow of foreign exchange. Startups bringing in foreign capital must do so through an authorized dealer (usually a Nigerian bank), which issues a Certificate of Capital Importation (CCI) within 24–48 hours. The CCI is critical—it guarantees the investor’s ability to repatriate dividends, loan repayments, and capital without restrictions. Employment Laws and Compliance: Hiring in Nigeria requires adherence to local labour laws governed by the Labour Act and the National Industrial Court Act. Key compliance steps include: Drafting legally compliant employment contracts Enrolling staff with the National Pension Commission (PENCOM) Making monthly contributions to the Nigeria Social Insurance Trust Fund (NSITF) and Industrial Training Fund (ITF) Foreign-owned startups must also comply with immigration rules when hiring expatriates, including securing a valid Expatriate Quota and Combined Expatriate Residence Permit and Aliens Card (CERPAC) Strategic Tips for Market Entry Partner with local firms: Joint ventures or strategic alliances help mitigate regulatory friction and provide access to local networks. Use professional service providers: Engage lawyers, accountants, and compliance officers familiar with the Nigerian tech space. Stay agile: The Nigerian regulatory environment is dynamic. Having a responsive compliance strategy is essential. Leverage innovation hubs: Establishing in Lagos or Abuja allows access to accelerators, investor networks, and grants. Conclusion Nigeria offers unmatched opportunities for tech startups with scalable solutions. However, success in this market demands strong legal and regulatory planning. From company formation to tax, IP protection, and data compliance, having the right legal framework is the bedrock of a thriving operation. Whether you're a startup founder exploring new markets or an investor supporting portfolio companies, working with local legal experts ensures you're not only compliant but also strategically positioned for growth. FAQs: Legal Entry into Nigeria for Tech Startups What is the best legal structure for a foreign tech startup in Nigeria? A Private Company Limited by Shares is generally preferred due to its simplicity and flexibility. Can I fully own a Nigerian company as a foreigner? Yes. Foreigners can own 100% of a Nigerian company, provided the business complies with immigration, tax, and investment regulations. How long does it take to register a company in Nigeria? Typically 5–10 business days, depending on how complete and accurate your documentation is. Do I need any special licenses to run a tech company? This depends on the sector. Fintech, healthtech, and edtech ventures may require regulatory approvals from CBN, NHIA, or NUC respectively. 5. How can I repatriate profits from Nigeria? You must bring in capital through a licensed bank to obtain a Certificate of Capital Importation (CCI). This enables lawful repatriation of profits and dividends. Are there any tax incentives for startups? Yes. The Pioneer Status Incentive and SME tax exemptions provide significant relief for qualifying startups. What are the major risks for foreign startups? Key risks include policy changes, currency volatility, and lack of regulatory clarity in emerging tech sectors. Engaging local advisors mitigates these challenges. Ready to Launch or Scale Your Startup in Nigeria? At The Trusted Advisors, we’ve guided numerous tech startups and international investors through Nigeria’s legal and regulatory landscape ensuring compliance, minimizing risk, and accelerating go-to-market strategies. Whether you're incorporating your first entity, navigating equity structuring, or securing regulatory approvals, our team is ready to support your success. Reach out to us today for a consultation on your startup or market-entry strategy, for tailored guidance on market entry and compliance, get in touch with our legal team at The Trusted Advisors. Email: [email protected] | Phone: +2348038954988

The Nigerian startup ecosystem is brimming with opportunity. With over 200 million people, increasing mobile penetration, and a growing appetite for digital solutions, it’s no wonder international investors and founders are turning their attention to Africa’s most populous nation. Yet, despite the enthusiasm, many startups especially foreign-backed ones  often run into avoidable legal hurdles that stall or sink their market entry plans. Understanding the legal landscape from the outset is critical to protecting your capital, your innovation, and your team. In this article, we highlight the legal requirements for foreign investors in Nigeria, Nigeria market entry guide,   Nigeria Startup expansion legal guide and most common legal mistakes startups make when entering Nigeria  and how to avoid them. Failing to Choose the Right Legal Structure One of the first decisions startups must make is the legal form of their Nigerian entity. Many default to a simple private limited company (Ltd), which may be sufficient for early-stage operations. However, foreign participation  even at minority levels  introduces regulatory obligations under the Companies and Allied Matters Act (CAMA) and guidelines from the Nigerian Investment Promotion Commission (NIPC). Common Mistake: Registering as a local company without complying with foreign ownership requirements, or failing to obtain a business permit from the Ministry of Interior. Solution: If foreign investors or founders hold shares, register the company with the Corporate Affairs Commission (CAC) as a company with foreign participation, and ensure post-incorporation filings (NIPC registration, Business Permit, Tax ID) are properly handled. Neglecting Regulatory Licensing Nigeria’s regulatory environment can be complex, particularly for fintechs, healthtechs, and edtechs. Depending on the sector, licenses may be required from bodies like: Central Bank of Nigeria (CBN) National Information Technology Development Agency (NITDA) Nigerian Communications Commission (NCC) Nigerian Data Protection Commission (NDPC) Common Mistake: Launching products or services without the appropriate licenses, assuming it can be sorted later. Solution: Conduct a regulatory mapping exercise before launch. For fintechs, this may include applying for a Payment Solution Service Provider license or participating in CBN’s Regulatory Sandbox. Tech-enabled health or education startups may need to engage the relevant ministry Improper Equity Structuring and Cap Table Management Founders often give away equity too quickly, too informally, or without proper documentation. This creates confusion during future fundraising rounds or exits. Common Mistake: Issuing shares to early employees or advisors without a formal agreement or vesting schedule. Solution: Structure equity clearly from the outset. Use instruments like shareholders’ agreements, option plans, and founder vesting arrangements. Ensure your cap table reflects every issuance and is legally enforceable in Nigeria. Ignoring Local Employment and Labour Laws Hiring your first employees in Nigeria? It’s not just about offering a salary. Employment contracts must comply with Nigerian labour laws, and startups must register for mandatory statutory contributions, including: Pension contributions Industrial Training Fund (ITF) Employee Compensation Scheme (NSITF) National Housing Fund (NHF) Common Mistake: Using offer letters without proper legal contracts, or engaging talent as “independent contractors” to avoid compliance. Solution: Issue compliant contracts, register with the necessary agencies, and build a talent strategy that aligns with Nigerian law while remaining startup-friendly. Overlooking Intellectual Property (IP) Protection Your brand, tech, and content are core assets. Yet many startups fail to register trademarks, protect proprietary code, or define IP ownership particularly when using freelancers or development agencies. Common Mistake: Launching without trademark protection or failing to assign IP created by developers to the company. Solution: Register your trademarks with the Trademarks Registry. Include IP clauses in all employment, consultant, and partnership agreements. If IP is developed offshore, ensure ownership is transferred to the Nigerian entity or holding structure. Non-Compliance with Tax and Regulatory Filings Even pre-revenue companies must comply with periodic filings from tax returns to annual returns with the CAC and reports to the NIPC (for foreign entities). Common Mistake: Delaying tax registrations, or missing filings and accruing penalties. Solution: Obtain a Tax Identification Number (TIN) early, register for VAT (if applicable), and engage a local accountant or law firm to manage filings and compliance calendars. Frequently Asked Questions (FAQs) Q1: Can I operate in Nigeria without incorporating a company? No. You must incorporate a company to do business in Nigeria, particularly if you plan to open a bank account, hire staff, or sign contracts. Q2: How long does incorporation take for a startup with foreign shareholders? On average, 10–15 working days. However, post-incorporation registrations (NIPC, Business Permit, etc.) may add another 2–4 weeks. Q3: Are there tax incentives for tech startups? Yes. Nigeria offers pioneer status incentives through the NIPC, which can grant tax holidays of up to 5 years for qualifying sectors. Q4: Can I fully own a Nigerian company as a foreigner?Yes. Nigeria allows 100% foreign ownership in most sectors, except for a few restricted areas like military or narcotics. Final Thoughts: Get It Right from Day One Entering the Nigerian market offers unmatched upside, but legal missteps can undermine your growth or scare off investors. As a founder, your energy should be focused on product and traction — not regulatory firefighting. At The Trusted Advisors, we help startups, investors, and scale-ups navigate Nigeria’s legal and regulatory terrain. From company setup to licensing, employment, and compliance, we offer tailored legal solutions that grow with your venture. Need help setting up or reviewing your Nigerian operations? Let’s talk contact or email us at [email protected], +2348038954988 for a free consultation.

We are pleased to have acted as legal counsel to Yikodeen Company Limited ("Yikodeen"), the subsidiary of Yikodeen Africa Corporation, the Mauritius-incorporated holding company and a prominent manufacturer of quality footwear and leather products in Nigeria. This engagement was in connection with a strategic equity investment by Aruwa Capital Fund II. This significant investment is poised to enhance Yikodeen’s factory operations, facilitate the acquisition of new machinery, boost production capacity, and strategically expand its market presence. This transaction represents a significant milestone in Nigeria's manufacturing landscape and demonstrates growing investor confidence in African industrial enterprises. We remain committed to supporting businesses like Yikodeen that are driving economic growth and employment opportunities across the African continent. The transaction was led by our Mergers, Acquisitions and Private Equity team comprising Simisola Eyisanmi, Melody Ibegbulam, Chukwuebuka Okoli-Akirika and Wuraola Oyeniyi.