Establishing a business in a new territory is a daunting task especially in a foreign country. When you are entering a terrain you know little about, there are certain business challenges you would encounter including potential legal conditions you need to meet to be properly established as a new business
How to Set Up Business in Nigeria as a Foreigner
It is Time to Set Up a Business in Nigeria
It is time to set up business in Nigeria as a foreigner. This is a decision you won’t regret. Even though establishing a business in a new territory is a daunting task especially in a foreign country.
When you are entering a terrain you know little about, there are certain business challenges you would encounter including potential legal conditions you need to meet to be properly established as a new business.
Foreign investment opportunities abound in Nigeria and the steps taken to set up your business to maximize them are pretty straightforward.
Demandsupplier in the past few weeks has received several for information on how foreign businesses and brands can be set up in Nigeria.
This post will clear the air about the steps to take to set up business as a foreigner in Nigeria.
It is tailored to foreign investors who want to know what to do to set up businesses in Nigeria and for companies or individuals who may have clients looking to establish in Africa’s biggest market.
6 Mandatory Steps to Set Up Business in Nigeria
To set up a business in Nigeria as a foreign company 6 mandatory steps are necessary:
Step 1 – Incorporate a Limited Liability Company
You need to incorporate a limited liability company with a share capital of N10m (Ten Million Naira) at the Corporate Affairs Commission (CAC) in Nigeria.
There is a search field to use to know if your company name is available for registration.
All companies intending to operate in Nigeria must be registered with the CAC. The minimum share capital which a company must have is N10,000 (Ten Thousand Naira Only).
However, for foreign owned companies, the minimum share capital is N10,000,000 (Ten Million Naira Only).
The process to register is fairly straightforward, and normally takes about 2-4 weeks.
Step 2 – Tax Identification Number
Once you have obtained the certificate of incorporation in Nigeria, the next step is to get a Tax Identification Number (TIN) and register for Value Added Tax (VAT) at the Federal Inland Revenue Service (FIRS).
The Nigerian authorities seal off offices of tax-defaulters (link to FIRS sealing off article). So, immediately you receive a certificate of incorporation, get a tax identification number. This number is what your company will use when it is paying corporate and all other taxes.
Step 3 – Registration for Value Added Tax
You also need to register for Value Added Tax on goods and services. Your company is expected to file monthly VAT returns to the FIRS. The process for tax registration takes between 1-2 weeks depending on the location of the tax office.
Step 4 – Open Bank Account with a Nigerian Commercial Bank and obtain Certificate of Capital
You will need to open a bank account that has the following types of accounts – a corporate account for Naira transactions and a domiciliary account – where the founders will pay the minimum paid up share capital and to transact abroad.
You can open this with a commercial Bank in Nigeria especially those that have subsidiaries abroad or have mother branches abroad. We suggest you open at least two Nigerian bank accounts.
Once this has been done, your company will have to get a certificate of capital importation from your bankers. This is the document that certifies that money has been paid into the bank account.
It is necessary for the future when your company needs to repatriate profits of the company outside of Nigeria. The documentations needed and timelines depend on the bank where the account is opened.
Step 5 – Registration with the Nigerian Investment Promotion Council (NIPC)
The NIPC is the body set up by the Government of Nigeria to encourage, promote and oversee foreign investments coming into Nigeria. It is does this role of overseeing investments.
The NIPC mandates all foreign owned companies in Nigeria to be registered with it. Some of the documents the NIPC requires include information on the company and the founders, tax payment and banking details.
Step 6 – Get a Business Permit from the Ministry of Internal Affairs
The last step for a foreign fully owned company to set up business in Nigeria is to register with the Federal Ministry of Internal Affairs for a business permit.
This permit is important not for the fact that for company cannot start trading without it, but also because it is a precondition if your company wants to get an Expatriate Quota and start work permit applications if it plans to hire foreign workers.
After you set up business in Nigeria by meeting all these six conditions, all you company needs to do is to abide by all business operation regulations. For example, the nature of your business may require that you register with specific regulatory bodies. This will be industry-specific therefore it is won’t be covered in this post.
Only make sure you fulfill all the regulatory procedures required by the industry your business is in.